‘China will continue to be a relevant manufacturing hub for the rest of the world, but specifically for North America, less than 10 percent of the products will come from there, which is, as you know [a] very big change from where we were a few years ago,’ HP Inc. CEO Enrique Lores said during the company’s earnings call Thursday.
HP Inc. CEO Enrique Lores said the company will have shifted 90 percent of its production for North America outside of China by the end of this fiscal year in what he described as a “very, very big change.”
“We have been doing a lot of work, and you have heard me talking about this before, to make our supply chain network more resilient, and we will share that by the end of our fiscal year — so by the end of October — less than 10 percent of the products coming to North America will be coming from China,” he said in a pre-briefing with journalists before the Palo Alto, Calif.-based company formally announced its quarterly earnings Thursday.
“China will continue to be a relevant manufacturing hub for the rest of the world, but specifically for North America, less than 10 percent of the products will come from there, which is, as you know [a] very big change from where we were a few years ago,” Lores continued.
On the call, HP CFO Karen Parkhill said to further guard buyers against the possibility of increases in U.S. tariffs on those goods, the company increased its inventory during the quarter.
“Just as part of our tariff mitigation plans, we purposely produced more inventory in the quarter, and we also took advantage of strategic buys in the quarter as well, and that increased our inventory,” Parkhill said. “As we pay for that inventory and sell that inventory, it will have a continued impact on our cash conversion cycle next quarter.”
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HP reported its fiscal 2025 first quarter earnings after the close of the market Thursday, showing growth in quarterly net revenue of 2.4 percent to $13.5 billion.
HP said its personal systems revenue, which includes sales of PCs, was up 5 percent year over year with revenue of $9.2 billion. HP’s commercial sales were up 10 percent and consumer sales dipped 7 percent. Total units sold were down 1 percent with commercial sales up 6 percent and consumer units down 11 percent.
HP stock fell a little more than 3 percent in after-hours trading Thursday to $32 per share.
In response to a question from CRN asking when partners should look for the PC refresh, Lores said the opportunity is happening now.
“We have seen significant growth driven by the Windows 11 refresh, and we are working very, very closely with our channel partners, sharing a lot of information in terms of the install base, the opportunity, to make sure they can take advantage of the opportunity,” he told CRN. “The PC business grew 10 percent for us this quarter and most of it is going through the channel. So our partners are experiencing it today.”
On the company’s printer side, HP surpassed one million subscribers for its Instant Ink service, one of the programs it launched last year. Overall print revenue was down 2 percent to $4.3 billion, but consumer print revenue increased 5 percent year over year with commercial printing down 7 percent.
Earlier this month, HP announced the $116 million acquisition of Humane, an AI device company that manufactured wearable pins. While the product saw early interest, demand flagged after early setbacks. Lores said HP didn’t purchase Humane for the pin.
“Really, what we are getting from them is both a very talented team that is going to help us to accelerate our strategy of integrating AI into our overall portfolio to deliver better experience across the board, and also some key software assets that will allow us to integrate further models into our products. And these are the two big things that the team will be working on,” he said. “They discontinued the pin before we bought, so we are not going to be managing the pin business at all.”
