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HP Inc. Rises After Bullish Profit Outlook for Fiscal 2022

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(Bloomberg) -- HP Inc. gave a profit forecast for fiscal 2022 that exceeded analysts projections and said it expects revenue to increase, defying predictions that the company’s sales growth has peaked. Shares jumped about 3% in extended trading on the announcement.

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Fiscal 2022 earnings, excluding some items, will be $4.07 to $4.27 a share, Chief Financial Officer Marie Myers said Wednesday during an online investor presentation. That’s higher than analysts’ average estimate of $3.78 a share, according to data compiled by Bloomberg.

Long-term revenue growth will be in the “low single digit” percentage, Myers said. Analysts have projected the company’s annual sales will decline for the next four years. Like many of his peers in the computer hardware industry, Chief Executive Officer Enrique Lores is trying to convince investors that the rebound in demand for gear generated by the pandemic isn’t going to fade with the reopening of offices and schools. HP is shifting its offerings to focus on higher-margin products, Myers said during the presentation.Lores argues that office equipment sitting idle for more than a year needs to be upgraded, and demand from corporations will make up for any slowing of consumer purchases. He’s also shifting HP’s printer business toward subscription services and away from one-time device sales. Over the longer term, persuading customers to pay HP to remotely manage their printing -- for example sending ink when the printer signals it’s running short -- will enable the company to grow more profitably, he has said.

The CEO is also trying to broaden HP’s reach by offering three-dimensional printing for markets such as packaging and a move into PC peripherals, trying to appeal to gamers with mice and headphones.

In September, rival Dell Technologies Inc. forecast annual revenue growth of 3% to 4% through 2026, and announced plans for a $5 billion share repurchase plan. HP’s sales fell short of projections for the quarter ended July 31, hurt by an industrywide shortage of semiconductors that is constraining personal-computer production.

Lores said the company is improving its operations by entering into long-term agreements with suppliers to better navigate the “supply driven” environment that he expects to continue at least through the first half of 2022. HP shares rose to a high of $30.45 in extended trading after closing at $28.59 in New York. The stock has gained 16% this year.

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