HP Inc. (HPQ) is scheduled to report results of its fiscal fourth quarter after the market close on November 26, with a conference call scheduled for 4:30 pm ET. What to watch for:
1. GUIDANCE: Along with its last report, HP Inc. guided for Q4 earnings per share in the range of 55c-59c. At the time, analysts were expecting the company to report Q4 EPS of 58c, and that estimate remains unchanged.
2. XEROX REPLY: On November 6, HP Inc. confirmed reports saying that it had received a proposal from Xerox (XRX) over a "potential business combination." HP said at the time that it received a proposal transmitted the day before. Following the confirmation, CNBC's David Faber reported that Xerox had offered to acquire HP for $22 per share, consisting of $17 per share in cash and 0.137 Xerox shares. Faber reported a day later that HP held "detailed" talks to buy Xerox within the last two months. The Wall Street Journal reported a week later that activist investor Carl Icahn, who holds a 10.6% stake in Xerox, was making the case for a proposed merger between Xerox and HP, saying at the time that he believes a deal could yield big profits for shareholders. On November 17, however, HP announced that its board had unanimously rejected Xerox's unsolicited proposal to acquire the company, saying that the board determined the offer "significantly undervalues" the company. Xerox said several days later that it twas "very surprised" at the rejection, and is "confused" by the reasoning for it. Xerox added at the time that it was "determined" to pursue a proposed acquisition of HP to completion. This past Sunday, HP reiterated its spurning of the Xerox bid, saying in a letter to Xerox that there "continues to be uncertainty regarding Xerox's ability to raise the cash portion of the proposed consideration and concerns regarding the prudence of the resulting outsized debt burden on the value of the combined company's stock even if the financing were obtained." However, Xerox said earlier today that it sent a letter to HP's board confirming its intention to engage directly with HP shareholders about a possible deal.
3. JOB CUTS: In early October at its Securities Analyst Meeting, HP provided details on its strategy and opportunities for long-term growth, announcing a fiscal 2020 restructuring plan to "simplify its operating model and become a more digitally enabled company." As part of the restructuring, the company expects to cut roughly 7,000-9,000 jobs through a combination of employee exits and voluntary early retirement. The company at the time estimated that it will incur total labor and non-labor costs of approximately $1B in connection with the restructuring and other charges, with approximately $100M in fiscal Q4 of 2019, $500M in fiscal 2020 and the rest split between fiscal 2021 and 2022. These actions are expected to be completed in fiscal 2022. The company estimates that these actions will result in annualized gross run rate savings of about $1B by the end of fiscal 2022. HP at the time also authorized an additional $5B share repurchase, raised its quarterly dividend 10%, and provided guidance for fiscal 2020.