The shares of HP Inc. jumped more than 15% after Berkshire Hathaway Inc. disclosed that it has acquired an 11.4% stake in the company and has purchased about 121 million HP shares through a series of transactions.
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The shares purchased by Berkshire Hathaway were worth about $4.2 billion at HP’s closing price. Berkshire Hathaway is a conglomerate that has subsidiaries in a variety of industries including the insurance, retail, real estate and manufacturing sectors. Last year, the company generated more than $270 billion in revenue.
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HP also has experienced strong growth recently due to increasing demand for its hardware. HP said that “Berkshire Hathaway is one of the world’s most respected investors and we welcome them as an investor in HP.” Because of Berkshire Hathaway’s strong investment track record, its decision to buy a large amount of HP shares represents a valuable vote of confidence in the PC and printer maker.
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HP is also working to improve profitability. In 2020, Chief Executive Officer Enrique Lores announced a plan to significantly increase earnings per share and set a goal of achieving “gross, annualized run-rate structural cost savings” of $1.2 billion during the 2022 fiscal year.
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HP generated sales of $17 billion last quarter, up 9% from a year ago and well above what was expected. The company makes most of its revenue from PCs and laptops. Much of HP’s remaining revenue is generated by its printer business. The computer peripherals unit plays a particularly central role in HP’s plans to continue its revenue momentum.Â
