HP Results Point to Declining Printer Sales

Printers are down, but PCs are up — for now. That’s the scenario presented by Hewlett-Packard when it discussed its third quarter earnings with analysts this week.

HP reported a quarterly profit of 49 cents per share, on revenue of $11.9 billion, compared with earnings of 39 cents a share on revenue of $12.4 billion for the same quarter last year. The company said its outlook for the current quarter is weaker than expected because of declining demand in the printer market.

But company president and CEO Dion Weisler said HP is gaining share in personal computers. HP outpaced analysts’ estimates for its third fiscal quarter in both revenues and earnings per share. But the company said its estimate for the fourth fiscal quarter will be lower than anticipated.

The personal computer market share was up in HP’s third quarter, which ended July 31, according to Weisler. Revenue from personal systems was flat compared to a year ago at $7.5 billion, while commercial net revenue decreased 3 percent and consumer net revenue increased 8 percent, according to the company. Total units shipped were up 4 percent, with notebooks units up 12 percent and desktops units down 6 percent.

Analysts: PC Sales Weakening

Why the increase? Weisler attributed the momentum in the consumer PC market share to HP’s ongoing effort to move into the upscale market with such high-end laptops as the HP Spectre 13 ultra-thin laptop and gaming PCs like the HP Omen PC gaming computer. Even so, industry analysts are projecting that PC sales will weaken during the year’s third fiscal quarter, which ends on September 30.

The positive results in HP’s PC sales might be a result of relatively buoyant numbers in that category overall. Last month IDC found that worldwide PC shipments totaled 62.4 million units in the second quarter of 2016 — 4.5 percent less than the same quarter in the previous year, but about three percentage points ahead of analyst forecasts.

IDC noted that part of the reason the PC market is struggling is that more consumers and enterprises are spending their tech budgets on phones, tablets and other IT needs.

Ongoing Struggles

HP’s printer business continues to struggle. Printing revenue was down 14 percent to $4.4 billion from $5.2 billion in the third quarter of 2015, while commercial printing revenue sagged 2 percent and consumer revenue was down 14 percent. Despite those numbers, Weisler insisted that the rate of decline in printers was slowing down compared to the downturns the company has seen in past quarters.

Independent tech analyst Jeff Kagan told us that HP’s struggles could be attributed to the company’s inability to ride the wave of surging product categories.

“HP has always been a leader in certain categories,” said Kagan. “However, they missed the new growth waves in the last several years. They are still a strong company in their historic categories, but those are no longer growth categories.

HP cut about 1,000 employees during the quarter, for a total of 2,300 workers so far this year. The company said it expects to be down 3,000 employees by the end of the fiscal year. “HP has been struggling off and on forever,” said Kagan.

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