HP Profits After Data Centre Gains, But PC Competition Hurts

HP’s PC business saw revenue declines of 2 percent, which was less than a decline than in past quarters and less than the overall market decline. That said, while overall consumer system revenues fell 10 percent, commercial PC sales grew 4 percent. Whitman said the company has put a lot of effort into the commercial PC business, including in its ability to offer a range of form factors that support multiple operating systems and run on multiple chip architectures.

“I think this is all about price and line-up as what we see in the enterprise is CIOs are trying to match the device to the worker group and what they need,” she said. “So maybe a certain group of workers just needs VDI [virtual desktop infrastructure]. There are some who need workstations, some who need laptops, and whether they’re backwards compatible to Windows or whether they are Chromebooks depends on what kind of work that team is doing. So that underscores our multi-OS, multi-architecture, multi-form factor strategy that frankly is relevant in the commercial space as it is in the consumer space.”

PC Rivalry

HP is the second-largest PC maker in the world, behind Lenovo, and while the company may be seeing improving shipment numbers with the introduction of lower-cost Chromebooks and Android-based PCs, there are still challenges from Lenovo and other vendors from the Asia-Pacific (APAC) region, TBR’s Bowden wrote.

“HP is facing stiff competition in North America and Western Europe as APAC vendors look to expand into the more profitable mature markets by utilising aggressive pricing to undercut HP,” he wrote. “HP is less willing to tolerate lower margins than are APAC vendors, limiting its ability to halt the erosion of its market share and forcing the vendor to rely on more specialised products such as Android notebook PCs and Chromebooks to target consumers outside the windows ecosystem.”

The printing business also saw a boost from commercial customers. Overall revenues fell 1 percent, but hardware revenues were up 6 percent, including 9 percent for commercial hardware and 4 percent for consumer hardware. HP also saw sales declines in enterprise services and software.

Cathie Lesjak, executive vice president and chief financial officer, said the company also was continuing its aggressive expense reductions, including the continuing shedding of jobs. HP has set a goal of cutting 29,000 jobs over several years, and Lesjak said that through fiscal year 2013, 24,000 jobs were cut. She added that by the end of 2014, that number could reach a total of between 33,000 and 34,000 people losing their jobs.

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Originally published on eWeek.