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Canalys finds PC demand surged in Q1, but shipments lagged due to supply issues

As workers moved from office to home and students moved to being educated online, demand for new PCs surged in Q1, but Canalys found that shipments actually dropped 8% in spite of this, due to COVID-19 related supply chain problems.

The 8% drop was the worst since 2016 when shipments dropped 12%, according to the firm. Companies were looking to get new machines into the hands of employees who normally worked on desktop machines in the office, while parents were buying machines for children suddenly going to school online.

Rushabh Doshi, research director at Canalys says that products were flying off the shelves in Q1, but the PC makers couldn’t keep up with demand as supplies were limited due to a number of factors.

“…PC makers started 2020 with a constrained supply of Intel processors, caused by a botched transition to 10nm nodes. This was exacerbated when factories in China were unable to reopen after the Lunar New Year holidays.

“The slowdown in supply met with accelerated demand, as businesses were suddenly forced to equip a newly remote workforce, placing urgent orders for tens of thousands of PCs. Children, too, needed their own PCs, as schools closed and lessons went online,” Doshi explained in a statement.

Lenovo and HP owned the lion’s share of the PC market in Q1 with 23.9% and 21.8% share respectively. Dell was in third with 19.6%. Apple was well behind in fourth place with just 6% of worldwide market share.

Only Dell projected positive growth with a modest 1.1% annual rate. All others were projected to be negative with Apple projecting the sharpest drop at -21%.

The good news is that from a revenue perspective, at least for the short term, these companies could command higher prices due to high demand and low supply, but overall the year looks bleak for PC makers, as Canalys predicts the rest of the year will see a further drop in sales as companies cut back on purchases, and consumers also likely limit purchases with so much economic uncertainty and demand satisfied for the short term.

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Xerox sweetens HP offer to $24 per share as take-over drama continues

Ever since Xerox set its sights on HP last November, the companies have been engaged in an ongoing battle. Xerox would like very much to take over the much larger HP, while the printer giant has so far rejected Xerox’s advances. Today, Xerox decided to sweeten the pot, raising its offer by two dollars per share from $22 to $24 or about $34 billion in total.

The company says it will make a tender offer officially on around March 2nd, which should give it more time to lobby shareholders, but Xerox claims to have spoken to larger HP stockholders, and they believe the larger number could finally push this over the finish line. Given HP’s previous reluctance, that remains to be seen.

“Xerox has met, in some cases multiple times, with many of HP’s largest stockholders. These stockholders consistently state that they want the enhanced returns, improved growth prospects and best-in-class human capital that will result from a combination of Xerox and HP. The tender offer announced today will enable these stockholders to accept Xerox’s compelling offer despite HP’s consistent refusal to pursue the opportunity,” the company wrote in a statement today.

The current dance between the two companies dates back to last Fall with Xerox believing the two companies would match up well together to become a printer giant, while HP’s board unanimously rejected the offer.

In a rejection letter last November, the company made clear, it didn’t appreciate or welcome Xerox’s overtures:

“We reiterate that we reject Xerox’s proposal as it significantly undervalues HP.

“Additionally, it is highly conditional and uncertain. In particular, 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,” the letter stated.

At the end of November, Xerox vowed to take the offer to shareholders. More recently, it said it would try to replace all of the HP board members, who rejected the offer previously, with a friendlier slate of candidates. That is slated to be voted on by stockholders at the HP stockholders meeting in April.

HP has not responded yet to this latest offer. Surprisingly, HP stock was down .12/share or 0.81% in early trading.

Note: We have requested comment from HP, but have not heard from the company as we went to publish. Should this change we will update the report.

Source: TechCrunch