Growing Hybrid Work Trend Drives Latest HP Acquisition
Updated: Dec 1, 2022
As employers and employees across the world have realized during the COVID-19 pandemic, people can still work outside a physical office and remain productive. With the hybrid work phenomenon in mind, HP announced on 28 March 2022 that it will acquire a key player in the office equipment sector. Poly, the corporate trade name for audio hardware manufacturer Plantronics, is being bought out by one of America’s tech pioneers, known for its computer and printer products.
Reuters reported that HP announced that it will pay US$1.7 billion in cash for Poly, with each share worth US$40. The deal is valued at $3.3 billion, if one includes the debts HP will absorb. The report noted that shares of HP fell by 1.4% in pre-market trading. The company believes that this deal will benefit the company’s growth in the long run. The deal is expected to close by the end of 2022.
The Reuters report also noted that this transaction is part of a wider trend where tech companies are acquiring firms whose products and services are crucial to hybrid and remote work. For instance, the San Francisco-based Salesforce acquired Slack for US$27.7 billion in 2021. Slack’s chat app has been an important communications tool for many businesses even before the pandemic.
At the end of 2021, HP reported that its overall net revenue went up by 12.1% to US$65.3 billion. However, the most recently available quarterly figures as of this writing (4Q 2021) reveal a more nuanced picture. The company said that while both its Personal Systems and Printing segments saw growth in the quarter, the latter segment grew much slower year on year (1%) relative to the former (13%). The company said that a significant drop in sales for printer products, especially in the commercial sector, was a cause of slower segment growth. This is consistent with how remote work has changed company expenditures. As people and companies shift to remote working, the need for office printers is decreasing.
Morningstar analyst Mark Cash noted in his comments on the HP-Poly deal that the former company remains overvalued because of the possibility that PC and peripheral demand will continue to drop as the current supply chain crisis comes to an end. First-quarter figures for HP are likely to come out in early April 2022.
Poly was founded in 1961 as Plantronics, an audio equipment manufacturer whose first major contract was supplying headsets for United Airlines ground staff. In its early days, it also supplied headsets for air traffic controllers and major US telecom monopoly Bell. It also played an important role in the early days of the “space race,” where it was responsible for developing and fabricating the headsets used by astronauts in the Mercury missions.
Plantronics’ place as a major player in the office equipment industry started in the 1980s when it developed wireless audio equipment that made speakerphones easier to use. This development enabled the wider and more viable adoption of teleconferencing as a business practice. Since that time, the company has been making audio peripherals for various applications, including mobile phones and the Microsoft Xbox gaming system.
In 2018, Plantronics acquired Polycom for around US$2 billion. This purchase eventually resulted in the company’s current trade name, Poly. As of 2022, the company’s product catalog includes headsets for both home and office use, video systems including monitors and webcams and other office conference equipment. With the HP acquisition, Poly’s equipment line will likely be closely integrated with the former’s PC products.
HP announced that it will acquire office audio equipment company Poly for US$1.7 billion in cash, in a deal that is expected to be worth $3.3 billion.
The computer and printer manufacturer said that the deal will benefit the company’s long-term growth as it responds to the growing trend toward remote and hybrid working.
The deal comes as HP is set to report 1Q 2022 figures in April 2022, with 4Q 2021 figures showing a slowdown in PC and peripheral sales growth.