Back To The Future

Image source: Santi S - Shutterstock

What's going on?

HP announced this week that it had agreed to buy video conferencing hardware specialist Poly, as the IT giant does its level best to keep rebooting with the times.

What does this mean?

Now that employers have firmly embraced hybrid working, HP’s customers are kitting out their offices with a host of new equipment to keep their teams connected. So the PC powerhouse is kitting itself out too, announcing that it’s buying Poly – seller of headsets, accessories, and more – in a deal worth $3.3 billion. That should help HP capitalize more fully on the remote working market, as well as help the company expand beyond PCs and printers to drive its long-term growth. It should work out well for Poly too: HP’s sheer size gives it a lot of sway with suppliers, which should help Poly clear a backlog of sales that’s apparently worth “hundreds of millions of dollars”.

Why should I care?

The bigger picture: Workforce solutions are the solution.
Before the deal, analysts were expecting Poly to grow its revenue by just 5% each year for the next few years. But HP believes it can turn that into 15% a year just by fixing Poly’s supply issues and improving sales, and ultimately make a tidy $500 million in revenue from the company by 2025. And why not: the “workforce solutions” market is worth $120 billion, and it’s ripe for the picking.

For markets: HP backs itself.
HP also reiterated its commitment to buying back at least $4 billion worth of its shares this year, which will reduce their supply and push up the price of those left over. And while some investors question whether it’s the best use of cash, others would beg to differ: plenty have already bought HP’s stock with the expectation that it’ll jump when the buyback happens. That might be why HP’s shares have outperformed both close rival Lenovo and the overall US stock market this year.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Cautionary Tale

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.