HP Reports Hardware Increase Offset Supplies Decline in 4Q2013

Hewlett-Packard reported better-than-expected fourth-quarter financial results. Total revenue was $29.1 billion in 4Q2013, down 3% from the same quarter a year ago. Earnings per share were down 13% year-on-year (YoY), falling to $1.01. Profit fell by 13% from the same period last year, to $1.01 a share. These results, though showing declines, beat most analysts’ expectations.

CEO Meg Whitman said, “Overall, I’m very pleased with the progress we have made, but we still have a lot of work to do to drive consistent execution and navigate a rapidly-shifting marketplace. As we enter the third year of our turnaround, we will continue to execute against the improvement areas we outlined at our security analyst meeting last month, including increasing our commitment to research and development.”

Regionally, the Americas (including US) reported revenue of $13.3 billion, down 2% YoY. The US market itself suffered slight decreases, as did Brazil and Canada. Europe, the Middle East and Africa (EMEA) posted $10.3 billion revenue in the same quarter, 4% less compared with the same period last year. Germany and other pockets of Western Europe witnessed growth during 4Q2013. Revenue in the Asia Pacific region, excluding Japan (APJ) was down 4% to $5.6 billion. The Indian market grew quite significantly whereas China delivered weaker performance.

In 4Q2013, HP reported $6 billion revenue in the Printing segment which was down 1% YoY. Operating profit was $1,071 million. Total hardware shipments grew by 6% YoY. Commercial hardware revenue grew 5% YoY, with units up by 9%, driven by strength in transactional laser printing, managed print services (MPS), and graphic imaging. Consumer hardware revenue grew 7% YoY, with units up by 4% year-over-year in 4Q2013. On the other hand, supplies, which accounted for 63.9% of Printing revenue, suffered a 4% YoY decrease.

In the laser market, in calendar 3Q2013, HP grew at over twice the rate of the rest of the market, while graphics revenue rose to a record level in 4Q2013.

For the inkjet market, HP has been focused on driving high-usage units such as, Ink in the Office, Ink Advantage for emerging markets, and Ink Subscription for developed markets. HP’s CFO Cathie Lesjak said, “We are seeing great results with Ink in the Office, which helped drive 4Q2013 SMB hardware sales up double digits, and Ink Advantage had strong performance across all regions. Officejet Pro X, a great example of our recent innovations, is seeing strong customer traction.”

Looking ahead, HP suggests the overall market environment will remain challenging and somewhat choppy. EMEA will continue to be soft, while China and other high-growth markets continue to face pressure.

Ms. Lesjak added, “In Printing, we will continue to invest in unit placements, where the lifetime return on the unit makes economic sense, and we expect to drive continued momentum in key strategies across ink, laser, and graphics.”

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