HP Sales Get Boost From PC Rebound -- WSJ
February 23 2017 - 2:03AM
Dow Jones News
By Rachael King
HP Inc. said sales rose for a second straight quarter after a
prolonged slump, as the personal-computer business showed further
signs of life.
The Palo Alto, Calif., company on Wednesday said revenue in the
quarter that ended Jan. 31 rose 4% from a year earlier, with sales
of notebook PCs especially strong. Sales in its printer business
slipped 3%, however, a smaller decline than in other recent
quarters but one that illustrates continued challenges in a
business that HP has significantly staked its future on. Net profit
from continuing operations fell 6%.
Over the past several years, HP and other computer makers have
battled a declining market for desktop computers, notebooks and
workstations. While parts of the PC market are still declining,
however, there are pockets of growth such as high-end corporate
notebooks and gaming systems, which Chief Executive Dion Weisler is
targeting. Sales of notebook PCs jumped 16% in the latest period,
and the company says it has gained traction in gaming with its OMEN
line of gaming products, for example.
"We went from nothing in gaming to being a real player in about
18 months," Mr. Weisler said in an interview last week.
That is helping HP outpace the overall PC market. During the
three months through December, its PC shipments grew 6.6% from a
year-earlier period even though global PC shipments declined 1.5%
for all suppliers, according to research firm International Data
Corp.
Personal computers still dominate HP's revenue, but the printing
business was responsible for nearly three-fourths of its profit
last year. HP is trying to innovate to spur growth in printers, a
business that broadly has been in decline. The company invented a
palm-sized printer, called the Sprocket, targeted to younger
consumers that is designed to pair with smartphones. Mr. Weisler
said that sold well over the holidays.
Bill Kreher, technology analyst at Edward Jones, noted that the
printer business appears to be suffering from weakening prices. HP
said unit sales of commercial printer hardware rose 2% in the
latest quarter, for example, but revenue for the segment fell
8%.
HP's largest source of profit is the ink and toner that printers
use -- a business that has been hit by competitors selling
less-expensive ink cartridges and a general decline in printing of
documents, especially by younger people. Sales in that segment fell
3% in the latest quarter, improving from a 16% drop in full fiscal
year 2016.
"It's a clear proof point that we're on the march to stabilize
supplies, revenue and constant currency by the end of this year,"
Chief Financial Officer Cathie Lesjak said in an interview.
HP shares edged up about 0.5% in after-hours trading following
the results.
HP said that earnings per share in the latest quarter, adjusted
to exclude items such as restructuring charges rose 6% to 38 cents
each, compared with analysts' expectations of 37 cents, according
to Thomson Reuters. Overall, Wall Street analysts expected revenue
of $11.84 billion, down 3.3% from $12.25 billion reported in the
year-earlier period.
For the fiscal second quarter, HP projected per-share earnings
in the range of 37 cents to 40 cents. Analysts polled by Thomson
Reuters expected per-share earnings of 38 cents.
Write to Rachael King at rachael.king@wsj.com
(END) Dow Jones Newswires
February 23, 2017 02:48 ET (07:48 GMT)
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