Random thought on HP

Just noticed HP inventory has gone up, on little bit digging it seems HP, DELL everyone’s inventory went up. Why? IS demand receding? Not sure. I think companies are adjusting to post COVID world of ‘just-in-time’ model to actually maintain some inventory ‘just-in-case’.

What this means is some of the high margins enjoyed in the last few years may have to come down. With increasing interest rate, the cost of inventory will be ever more higher.

Should we use WEB’s purchase of HP as “contrarian signal”?

I hesitate to say we’re “post COVID” but I think you’re right that Covid-related shipping delays put a spotlight on “just-in-time” models.

Just in time models only really save the time value of money otherwise spent on inventory, warehousing cost, and loss of product that’s outdated before it can be used. I think some companies finally figured out how stupid it is to hold up $40K+ sales over $5 to $10 parts that take up minimal warehousing space. I’m looking at you car industry.

Besides insulating companies from temporary supply shocks in foreign companies, stocked up inventory is also a bit of an inflation hedge.


From Dow Jones Newswires at my brokerage:

PC market revenue rose 15% in 1Q as higher prices offset the first year-on-year shipment decline since 1Q20, Canalys says. “Even if customers are forced to delay purchases due to rising prices in the short term, a large wave of device refresh is inevitable, especially given that more than 50% of active devices are more than four years old,” Canalys Principal Analyst Rushabh Doshi says in a note, adding: “The resumption of workplace activity at close to pre-pandemic levels coupled with hybrid and remote workers needing higher-specified PCs to maximize productivity means business IT expenditure will remain elevated in 2022.”