Shares in HP Inc, which includes the company’s legacy hardware business, fell more than 16% on Wednesday after the company’s results failed to impress, adding to concerns about its ability to ride out a down turn in the printer and PC markets.
HP revenue falls from PC and printer businesses
HP’s revenue from printers and personal computers fell 14% each in Q4 this year, which was their worst performance in the year ending 31st of October, and the current quarter’s profit came in below market expectations.
“Things got worse. Not only did they not get better – they got worse”, Shebly Seyrafi, an analyst at FBN Securities said.
HP’s chief executive Don Weisler said the printer business is a much greater challenge than the PC market, and they have been cutting prices in order to fend off competition especially from companies in the Far East such as Canon and Epson.
The price reductions and the stronger dollar however have slashed the income the company sees from foreign markets.
“The unintended result is that we are not getting the yield per unit we would have expected”, said Weisler.
Revenue from HP’s printer supplies business, for ink cartridges and toner fell 10% in the current quarter, which is a blow to the company as such supplies account for most of HP’s profits.
HP’s PC businesses has also been hit hard as sales around the world have fallen for several consecutive quarters, and Windows 10 has made little impact on kickstarting the industry.
Meg Whitman, who heads Hewlett Packard Enterprise Co, said on Thursday that the PC business should rebound in the next year to year and a half.
Whitman previously headed Hewlett-Packard Co, but drove the split of the faster growth hardware and services units from the PC and printer business late last year.
“Ultimately I think (HP Inc), the way it’s structured, it’s going to be more of a sort of dividend yield play”, said Jeffrey Fidacaro, an analyst at Monness, Crespi, Hardt, & Co Inc.
Hewlett Packard Enterprise saw its shares gain more than 8% this week after it held steady on its profit forecast for 2016.
SOURCE: Reuters.
Larry Banks is a keen follower of technology and finance. He has worked for a variety of online publications, writing about a diverse range of topics including mobile networks, patents, and Internet video delivery technologies.