HP Inc: The price is wrong
Summary
Your letter dated 6 January, 2020 regarding financing does not address the key issue – that Xerox’s proposal significantly undervalues HP – and is not a basis for discussion. At the time, Xerox CEO John Visentin wrote: “It remains clear to all of us that bringing our companies together would deliver substantial synergies and meaningfully enhanced cashflow that could, in turn, enable increased investments in innovation and greater returns to shareholders.” In mid-December, Reuters reported that in a presentation aimed at HP Inc shareholders, Xerox claimed the proposed acquisition would result in sales growth of as much as $1.5bn for the combined company. Presenting at the Barclays Global technology, media and telecommunication event in December, Alex Cho, president, personal systems at HP Inc, told analysts that there was a lot of movement and energy in the PC market. They are spending more time on PCs on very high engagement activities, which is driving refresh and growth.” Cho said the consumer sector was impacted by the availability of Intel CPUs, while HP Inc’s commercial PC business was benefiting from the Windows 10 PC upgrade as enterprises rush to complete migration from Windows 7 before support ends on 14 January, 2020. Flexible work styles mean companies are implementing new technologies.” Cho said HP Inc was also seeing demand for device-as-a-service among its corporate customers, as well as what he described as “discrete services” for organisations not yet ready for fully managed desktop and mobile device services.