Tackling issues of diversity is near and dear to the heart of HP (HPQ) CEO Enrique Lores, who started at the computer and printer giant as an intern back in 1989.
Lores is asking his fellow CEOs to reject the false choice between making a profit and making a difference at this critical point in the nation’s history. We will say the fact he continues to see this choice being bandied about in C-suites across the country is unnerving, but ultimately serves as a call to action to upend the status quo.
“I think in this period of change, staying by the values of the company is really important. What HP cares about is not only about creating profit for our shareholders, which is very important, but it's also critical what value we bring to our employees and to the communities that we serve,” Lores explained in an exclusive interview with Yahoo Finance.
HP is rising to the challenge on the diversity front.
The company just issued its first stand-alone human rights progress report. HP’s report card says it has the most diverse board in the U.S. tech industry. Nearly 63% of its U.S. hires in 2019 came from under-represented groups. Even though HP is far ahead of most on diversity in big tech land, it acknowledges more needs to be done on its part. The company says in the report the number of Black and African American employees is “not where it should be.”
“We know there is much more work that we have to do,” Lores says.
To balance the scale, HP said it plans to double the number of Black and African American executives by 2025. It’s a bold initiative, but ultimately one that is right for society and for driving the diversity of opinions that would drive innovation in a tech company. HP should perhaps join other big name companies such as Yahoo Finance’s parent company Verizon, The North Face, Unilever and Starbucks in halting its marketing spend on Facebook until the social media giant promises to better police its content.
“We are a purpose driven brand, and where our brand shows up is very important for us and has been very important for us in the past. This is something that we have communicated to Facebook and other platforms because this is relevant,” Lores explains.
‘A very fluid situation’
That said, HP is still a publicly traded for-profit company meaning there’s an intense scrutiny by investors on the bottom line. It’s a bottom line being influenced by numerous factors right now, ranging from offices being closed (less printer demand during the COVID-19 pandemic) to a surge in work-from-home computing demand to how much stock HP buys back.
Sales at HP’s personal systems and printing segments dropped 7% and 19%, respectively, in the most recent quarter from the prior year. Operating profits in the personal systems segment spiked 43% from the prior year, but fell 35% in the printing business.
HP said sales were held back by supply constraints from factories in China due to the COVID-19 pandemic. Most of HP’s production in the country is now back up and running. Meanwhile, the uncertain demand backdrop due to COVID-19 has HP approaching its planned $8 billion in stock buybacks for the next 12 months more cautiously. That has left investors a little tepid on HP’s stock following its late May earnings report.
The stock is down about 20% year-to-date compared to the 9.8% gain for the Nasdaq Composite, according to Yahoo Finance Premium data. For what it’s worth, Hewlett-Packard Enterprise shares are down 40% on the year.
“We believe that HPQ's top-line growth remains constrained in the NT, and while it is possible that revenue grows on easier comps a year from now or more, we question whether investors will believe the sustained nature of that growth in CY22 and beyond,” wrote Deutsche Bank analyst Jeriel Ong after a recent meeting with HP execs.
Lores continues to strike an upbeat tone on the path ahead, though notes there remains ups and downs given the unpredictable nature of the pandemic.
“We continue to be in a very fluid situation. Every day we see opportunities and areas where the business is doing better, but also we see challenges,” Lores says. “Clearly the latest social problems have become also an issue in some areas. So I would say the situation remains fluid. From our side what is important is to maintain our focus on our customers and partners, to make sure that we maintain our innovation engine and our operational excellence, and that we continue to be driven by our values to show the world what are the elements that make HP a different company.”