HP CEO Discusses Poly Acquisition, HP’s Hybrid-Work Growth Strategy
On March 28th, HP Inc. CEO and President Enrique Lores held a conference call with investors to discuss HP’s planned acquisition of Plantronics Inc. (Poly), a provider of video-conferencing solutions, and how it will further HP’s focus on hybrid-work solutions, which it sees as a major growth opportunity.
HP is seeking to acquire Poly for $1.7 billion in cash; including Poly’s debt, the acquisition comes to $3.3 billion. The company expects to complete the acquisition by the end of 2022, subject to regulatory and shareholder approval.
During the investors’ call, Lores said, “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. Importantly this transaction positions HP for long-term profitable growth and value creation.”
According to Lores, the pandemic has resulted in a “once in a generation opportunity” to redefine the way the work is done, with some employees working at home, or in the office only some of the time,
Part of HP’s plan is to use its global commercial and consumer sales channels to distribute Poly products, and to also combine Poly’s products that include video-conferencing equipment, headsets, and conferencing phones, with HP’s PC portfolio
Although HP’s share price dropped 4 percent after the announcement, Lores told CNBC in an interview that HP is buying Poly for long-term value.
Lores said HP sees hybrid work as a “tremendous opportunity and we feel it (Poly) is going to help us accelerate our leadership in this space. The combination of assets that Poly brings is going to help us to accelerate our growth in two of our key growth areas.”
The HP CEO said hybrid work “is a long term, secular trend that is driving strong and sustained demand for solutions that enable seamless collaboration across home and office environments.”
The acquisition is also part of HP’s strategy to expand into growth opportunities through strategic mergers and acquisitions. HP believes the Poly acquisition will help it accelerate its growth in peripherals and workforce solutions, which are two of its five key growth areas. It says the acquisition will also position HP in the rapidly growing meeting-room solutions industry.
“Together we will provide customers with a unified platform that simplifies IT administration and provides a comprehensive solution for today’s hybrid workforce,” said Lores.
HP will be integrating Poly’s products into its programs and allow its resellers to expand their businesses with Poly products.
Lores said HP and Poly’s channels are very complimentary, with HP having retail, commercial, and enterprise channels. Poly adds a strong presence in the audio/video channel, where HP does not, and where it will also expand into.
Lores said Poly has experienced supply-chain constraints and lack of component availability, and this has resulted in a very elevated backlog, limiting its growth. HP will help Poly alleviate this with its own supply chain, enabling Poly to build more products.
Meeting-Room Market Opportunity
Lores stressed that the market for meeting-room equipment for office employees, and for collaborating with workers at home, is substantial. He also noted that only 10 percent of offices have been equipped with videoconferencing solutions. HP expects that more and more, as companies start reopening and allow people to work from home, as HP will be doing, they will be investing in equipment for linking home workers with those in the office.
Lores noted that many video-conference systems today aren’t designed for connecting with workers at home “So most companies, including HP, are redesigning our setups to make sure that we provide inclusive systems for people that will be connecting from home. This will be driving the refresh,” he said.