Final set of financials before the HP split reveals declines in PCs and printers, but enterprise growth
The final set of financial results from Hewlett-Packard have been published and reveal some of the underlying challenges the now defunct company faced in certain markets.
In its final year of existence before its split, the complete HP reported both declining profit and revenues, not helped by struggles in its PC and printer business.
On 1 November 2015, HP officially ended its 76-year-old history as a single entity when it split into two operations, namely HP Inc (focused on the computer and printer business), and Hewlett Packard Enterprise (focused on business hardware and service operations).
Its final set of financials before the split revealed the challenges the single entity had faced, after it revealed sliding profits and sales.
For the fiscal year ending 31 October, HP reported a net profit of $4.5bn (£3bn), down 9 percent from $5bn (£3.3bn) in the previous year.
Likewise there was bad news on the sales side, as revenues for 2015 came in at $103bn (£68.5bn), down 7 percent from $111.4bn (£73.8bn) in 2014.
So where did it all go wrong for HP in its final year as a single entity?
Well, revenue for Personal Systems (PCs, notebooks etc) was down 14 percent year on year; commercial revenue decreased 15 percent and consumer revenue decreased 12 percent. HP also shipped 12 percent fewer PCs, with desktops down 17 percent notebooks down 5 percent.
HP Inc continues to hope that Windows 10 will help restore growth for the PC market, but undoubtedly it will be less than pleased at Microsoft’s recent entry into the laptop market with its Surface Book, which make headlines amid claims it is twice as powerful as Apple’s MacBook Pro.
And things were not much better at another of HP’s cash cows, namely printers, where revenues fell 14 percent year on year.
But on the enterprise side (Hewlett Packard Enterprise), things seem slightly rosier, as Enterprise Group revenue was up 2 percent year on year. That said, Enterprise Services revenue was down 9 percent year on year.
“In these challenging markets, we are taking decisive actions that will protect our core business which generates the majority of our cash flows,” said Dion Weisler, president and chief executive officer of HP Inc. “We firmly believe in our strategy and, given our scale, innovation, channel reach and brand, we are well positioned to gain profitable share in the markets where we choose to play.”
HP Inc revised downwards its first quarter outlook, but Hewlett Packard Enterprise, headed up by CEO Meg Whitman, stuck to its earnings forecast.
In September Hewlett Packard Enterprise announced it would lose between 25,000 to 30,000 jobs.
Those job cuts are to come on top of the 55,000 workers already made redundant at the computing giant.
Whitman defended again the plan to split the companies in two.
“The wisdom behind the split is becoming apparent. You can already start to feel it,” Whitman was quoted as saying by Re/code. “The two companies are more nimble and more agile than they were combined. … Now they’re off and running.”
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