Issue #0518/3 - In the first full quarter of business since its change of CEO, Hewlett-Packard’s results are not all they might be but there are signs of strong growth nevertheless.
Hewlett-Packard has again announced record earnings.
Its latest quarter’s business (Feb-April, 2005) again saw record revenues, with overall growth of 7% year-on-year, including 23% growth for the loss-making software group.
Modest growth in the Personal Systems Group (PSG), of 6% year-on-year, and of 5% in the Imaging and Printing Group (IPG) does not reflect the exceptional growth in unit sales in the quarter.
IPG saw 96% year-on-year unit growth on its colour LaserJet products and 61% on its multifunction peripherals, underlining the recent realignment of Hewlett-Packard’s pricing policy.
No longer can it be assumed that Hewlett-Packard printers will be more expensive than the competition, relying on its reputation to win business. We now see the company fighting for market share on the same footing as its competitors—resulting in lower cost hardware.
Revenue growth for supplies products is probably considered to be disappointing, at 4%, when the company is more familiar with reporting growth of 8% or 9% (and up to 15%) in this area. However, revenue of $3.58bn still represents 56% of IPG revenue.
IPG’s operating profit seems to be hard hit this year, falling from 15.6% of revenue in Q2 of 2004 to 12.7% Q2 of 2005 while PSG operating profits rise sharply.
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