Asia PC hardware:Read-across from HP’s 3QFY17results

3QFY17 came in stronger on broad-based strength. HP (HPQ US, NR) reported3QFY17 results that were stronger than consensus, with sales 6% above consensus andnet profit 5% higher. PC sales were the bright spot with growth of 12% y-o-y. By product,NB units were up 12% with sales growth of 16% y-o-y. By segment, commercial salesgrew 11% y-o-y vs consumer at 14%. Key driving forces are market share gains atexpense of peers and innovation. HP has steadily increased its global market share from21.5% in CY4Q16 to 22.4% in 2QCY17; it also highlighted the OMEN gaming portfolio,Spectre x2 (2-in-1 device), and revamped Pavilion line as part of innovation efforts.

    Component price hike to continue, re-pricing and innovation are ways to mitigate.

    HP indicated today that it expects component price hikes to continue (albeit at a slowerrate), and strategic component inventory build, re-pricing (which would impact enddemand) and product innovation are potential ways to mitigate. HP’s comments echoedwhat we have observed in the Asia PC food chain