Do not miss these quotes from HP's management

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<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Investors were clearly not satisfied with the results financial this HP Inc. (NYSE: HPQ) sold its shares, which resulted in a 17% decline in its shares on February 28 and placed the security in negative territory for the year. Investors were apparently dissatisfied with the weakness of the business printing supplies sector. "data-reactid =" 11 "> Investors were clearly not happy with the results HP Inc. (NYSE: HPQ) sold, sending its shares down nearly 17% on February 28 and placing the stock in negative territory for the year. Investors were apparently unhappy with the weakness of the company's printing supplies sector.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Although such a large decline may bring some investors to press the panic button and sell their shares and others to buy immediately immersion, it's worth taking a step back and see what management had to say about the company before to make a decision but here are some important quotes from HP Inc.'s last earnings call. "data-reactid =" 12 "> Even though such a large drop may prompt some investors to panic to sell their shares and others to immediately buy the downside, it's worth taking a step back and see what management had to say about the company To do this, here are some important quotes from HP Inc.'s latest earnings release.

Source of the image: HP Inc.

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On the call, President and CEO, Dion Weisler, began by explaining that the company's business turnover in print supplies had dropped 9% during the quarter, citing in the EMEA region for this weakness. (EMEA means "Europe, Middle East and Africa")

Weisler stated that the company considers its supply activities in a four-box model that includes the following categories: "base, use, share and price in-store".

"The two different factors in our plan have been a decline in capital and, to a lesser extent, pricing," added Weisler.

He went on to say that all HP's business customers "buy supplies online and that while we have a significant share of online sales, this percentage is lower than traditional resellers and in-store retailers."

The executive also added that "as macroeconomic uncertainty has increased, we have seen greater customer price sensitivity, putting pressure on both our share and the price of our supplies ".

All this has led the company to revise its printing supplies business forecast to move from "flat to slightly rising" for the current fiscal year, down 3%.

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During the conference call, Weisler presented the company's plan to cope with the headwinds that hit its printing supplies business. First, the company "is taking steps to reduce the level of supply stocks in the market to comply with our new stock assumptions."

In addition, the company is ready to implement "additional action improvement plans, including online programs, targeted marketing and brand protection, to promote the value of consumables. HP origin in terms of quality, durability and impact on the environment. "

"The agility of the team and its ability to meet challenges give me confidence in how we will handle this environment," said the executive.

<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The strength of personal systems"data-reactid =" 36 ">The strength of personal systems

Although the company's printing supplies business is not up to expectations for the fiscal year, the company's personal systems business, which mainly consists of sales of personal computers, continues to behave well.

During the quarter, HP said its personal systems business figure rose to $ 9.66 billion, up 2.3% from a year earlier (and, as pointed out the company in its presentation of the results, up 3.5% at constant exchange rate). Operating income reached $ 410 million, up $ 75 million or 22.4% from the prior year.

With respect to this case, Weisler stated that "[we] improve our product line and manage our costs. "He also claimed that the company" was strengthening [its] position in strategic segments where we expect pockets of growth and the provision of differentiated and high-end hardware and services. "(Examples of such areas include game-oriented computers.)

The story continues

Steve Fieler, chief financial officer of HP, explained that, for the rest of the year, HP's personal systems segment will be forced to deal with the processor's supply constraints during the first half of the year. Fiscal year 2019 "with improvements in the second half".

By definition, CPU constraints will limit the number of systems that can be delivered by HP, suggesting that revenue from the company's personal systems should be lower than what they would otherwise have been without these constraints .

Mr Fieler also said that "we expect the cost of all components and logistics will improve compared to the first quarter". This suggests a gross margin and, ultimately, an expansion of the personal systems operating margin, with the exception of a sharp increase in operating expenses.

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The HP stock certainly takes a hit following the disappointment on the side of the print supplies. On the bright side, though, is that the company's personal systems business is still going well, the situation should improve in the second half of the year. In addition, the company has submitted a credible plan to help stabilize its printing supplies business.

<p class = "canvas-atom-text-canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "And to top it off, if the company reaches its forecasts for the entire year, between US $ 2.12 and US $ 2.22.GAAP EPS, the stock is not particularly expensive after the decline, it is trading about nine times more than the middle of this range. "data-reactid =" 49 "> And, to top it off, if the company achieves its annual target with non-GAAP EPS between $ 2.12 and $ 2.22, the stock is not particularly expensive after the decline, it is trading about nine times more than the middle of this range.

Although it may run out a while before an upward catalyst appears for the title, the risk of further significant downside seems to me quite low.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 51 "> More from The Motley Fool

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