Components peripherals News
HP CEO Enrique Lores On Poly Possibilities, Supply Chain And A ‘Once In A Generation Opportunity’
HP CEO Enrique Lores says his company’s $3.3 billion acquisition of Poly creates a ‘once in a generation opportunity’ to redefine the hybrid work landscape.
HP-Poly Deal Creates A ‘More Growth Oriented Portfolio’
HP CEO Enrique Lores told analysts that his company’s $3.3 billion acquisition of Poly creates a “more growth-oriented portfolio” that will drive “significant” returns for shareholders.
“This is a compelling combination to accelerate HP’s strategy to create a more growth-oriented portfolio and further strengthen our industry opportunity in hybrid work solutions,” said Lores during the call. “Importantly this transaction positions HP for long term profitable growth and value creation.”
HP Is paying $40 per share for Poly, a 50 percent premium on the close of the shares last Friday. The $3.3 billion price tag includes Poly debt
Lores said the pandemic has transformed the role technology plays in people’s lives with a “once in a generation opportunity” to redefine the way the work is done in a hybrid workplace.
HP said it expects the acquisition to be “immediately accretive” to revenue growth, margins and non GAAP EPS once the deal is closed.
In fact, HP said it expects to “realize substantial revenue synergies” in peripherals as well as meeting room and workforce solutions as a result of the acquisition.
HP, in fact, expects to achieve $500 million of revenue synergies by fiscal year 2025. Furthermore, HP said it expects to accelerate Poly’s revenue growth to an approximately 15 percent compound annual growth rate over the first three years after the closing of the acquisition.
A key part of that plan to drive Poly growth involves leveraging HP’s global commercial and consumer sales channels to drive expanded hybrid work solutions with Poly products. HP also expects to drive incremental sales from combining Poly’s products with HP’s PC portfolio
HP expects to improve Poly’s operating margins by approximately six percentage points from current levels by fiscal year 2025 “driven by scale efficiencies across supply chain, manufacturing and overhead.”
HP shares were down $1.78 or four percent after the PC and printer maker acquired Poly in a $3.3 billion cash deal.
HP paid $40 cash for each share of Poly, a whopping 50 percent premium from the Friday close of Poly shares. Poly shares stood at $49.77 in mid-day trading.
Responding to the drop in HP shares, Lores told CNBC that HP was buying Poly for the long term value.
“We are buying this company for the long term and for the long term value that we think we are going to be creating,” he said. “We strongly believe in the opportunity that we see in the hybrid space. We think this is a winning combination because of the portfolio, the technologies that they have and the complimentary go to market. We think we can really scale and the financial case is very strong. Long term this is a great acquisition for HP and we are very confident about that.”
CRN has reached out to HP for an interview with Lores with additional questions on the blockbuster deal.
Here are comments Lores made gathered from an early morning analyst call, a press conference and an interview with CNBC.