The deterioration of the situation in the printing device segment caused a decline in the stock price of HP Inc

The day before, HP Inc., a major supplier of not only finished computers, but also printing devices, published its quarterly report. The decline in revenue in the latter segment forced the management of HP Inc. give a not very optimistic forecast for the dynamics of total revenue by the end of the year, therefore, after these statements, the company’s stock price decreased by about 3%.

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In the HP Inc. calendar Having recently completed the third quarter of fiscal 2024, its total revenue in the period was divided among its core businesses as follows: the personal systems division contributed 69% of revenue, with print devices accounting for the remaining 31%. Consumables for printing devices directly accounted for 20% of revenue, the commercial segment accounted for 9% of revenue, and the consumer segment accounted for only 2%. But in terms of operating profit, the printing devices business accounted for 54%, while personal systems accounted for the remaining 46%. In total, the company’s operating profit for the quarter amounted to $1.3 billion, and year-on-year revenue increased by 2.4% to $13.5 billion. Personal devices for corporate clients accounted for 49% of the company’s total revenue in the past quarter, while consumer PCs accounted for only 20% of revenue.

The personal devices segment as a whole provided revenue growth of 5% to $9.4 billion, it was distributed between the commercial sector (71%) and the consumer sector (29%). In physical terms, supply volumes of personal systems increased by 1%, in the consumer segment they decreased by 6%, but in the commercial segment they increased by 6% year-on-year. Core profit decreased in the consumer sector by 1%, but in the commercial sector increased by 8%. In other words, HP Inc.’s business. relied heavily on sales of finished computers to corporate clients. It was the growth of their sales that allowed the company to increase revenue overall for the first time in two years in annual comparison. So-called AI PCs are growing in popularity, but their share of HP Inc.’s sales structure is It’s still too small to have a significant impact on revenue.

In the printing devices segment, HP Inc. revenue in the last quarter fell by 3% to $4.1 billion, of which 65% was provided by consumables, 28% came from commercial printing devices, and 7% from consumer printing devices. According to company representatives, the decline in revenue in the printing devices segment was caused by a slower market recovery and price wars with competitors. The operating profit margin in this area dropped over the year from 18.6 to 17.3%, largely due to increased costs and lower prices for the brand’s products.

Revenue from sales of consumables decreased by 2%, revenue from sales of printing devices in general fell by the same amount; in the commercial segment, printing devices brought in 5% less than a year earlier, but in the consumer segment, revenue increased by 2%. In the current quarter, HP Inc. expects to receive from $3.35 to $3.45 in specific income per share, which is lower than the $3.6 per share forecast by analysts. This discrepancy was one of the reasons for the decline in the company’s stock price after the publication of the report. As the company’s CEO Enrique Lores explained in an interview with Bloomberg, revenue from sales of printing devices will decline until the end of this year, since companies do not have serious reasons to update their fleet of printing equipment right now.