HP's STRONG Q3 RESULTS NOT SO ROSIE IN INK/TONER DIVISION

[Anonymous]

http://www.redorbit.com/news/technology/1531779
Hewlett-Packard’s Strong Q3 Results Not Shared in Printer Division
August
2008,Hewlett-Packard’s stronger-than-expected third- quarter
performance may have helped lead a rally on Wall Street Wednesday, but
its earnings report released Tuesday revealed a decline in its imaging
and printing business. While the company reported revenue of $28
billion, up 10 percent year-over-year, its Boise-based imaging and
printing division – traditionally accounting for about 27 percent of
HP’s revenue – experienced a 14 percent decline.In an investor call on
Tuesday, CFO Cathie Lesjak said that consumer printer hardware units
were flat and commercial printer hardware units were down 9 percent
year-on-year.

“Within IPG (Imaging and Printing Group) we are
focused on reducing our cost with ongoing initiatives to improve supply
chain efficiency and lower product costs,” she said. “We are investing
these savings in targeted growth areas including the enterprise and
graphic arts. We will continue to be prudent in our pursuit of lower
end units and will balance growth and profitability to drive long- term
results.”President and CEO Mark Hurd, responding to a question from
analyst Shannon Cross of Cross Research, said some of that decline was
due to a shift toward wireless printers.”You look at a home today,
instead of having a printer wired through every desktop PC, you now see
many families integrating into one printer or two printers that are
networked around the home. We had a 150 percent growth in our wireless
printer category this year,” he said.

“Therefore, we would be
quite aggressive in pursuing that market segment in a way that we think
makes sense,” he added. “That we would differentiate from a very, very
low-end laser with a very low- end connect rate in a single function
world that probably wouldn’t bring us much long-term value.”When asked
if that meant HP would be shifting to the graphic segment at the
expense of traditional printer businesses, Hurd was non-committal.”I
think what we want to do is grow in the graphic segment. We think it is
a very strategic segment. But I wouldn’t think of it as us stopping
doing this to be able to do that,” he said.

HP’s imaging and
printing business, based in Boise, made profits of $2.38 billion on
revenue of $14.9 billion in the first six months of the current fiscal
year, but is undergoing a reorganization that has fueled rumors of
layoffs.Though unwilling to release any statement on whether jobs cuts
are in the offing among the more than 3,000 employees at the Boise
campus, HP has begun shedding jobs at its Corvallis, Ore. InkJet plant,
KTVB reports.

The reorganization became public in late June,
with reports that HP would consolidate its five imaging and printing
groups into three, effective Aug. 1. So far no sweeping job cuts have
occurred, but several top ranking executives have announced their
retirement, including senior vice president of the company’s LaserJet
Printing Business Nor Rae Spohn who will leave the company Nov. 1.HP
ended the day’s trading at $46.16, up $2.47, or 5.56 percent.

[Author]

August 26, 2008 at 12:38 PM