Hewlett-Packard Is Rebuilding Its Printing Business
Graphics and A3 drove printing revenue growth
Earlier in this series, we discussed that Hewlett-Packard’s (HPQ) Printing Business segment’s revenue rose 10% YoY (year-over-year) in fiscal 3Q17. Its printing revenue rose 2% YoY in fiscal 2Q17 to $4.7 billion and fell 3% YoY in fiscal 1Q17 to $4.5 billion. Its printing revenue fell 14% YoY in fiscal 2016 to $18.26 billion.
Hewlett-Packard’s graphics vertical saw revenue growth (on a constant currency basis) for the 16th consecutive quarter. The company thinks that it can grow its revenue even faster in this space.
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Fiscal 3Q17 was the first full quarter that Hewlett-Packard shipped its portfolio of A3 multifunction printers. The company is optimistic about its revenue growth due to the products’ popularity among Hewlett-Packard’s customers. Hewlett-Packard will close the acquisition of Samsung’s (SSNLF) printing business later this year. The acquisition is expected to support the momentum in the A3 printing space. Last year, Hewlett-Packard announced the acquisition of Samsung’s printer business for $1.1 billion.
Supplies revenue expected to remain flat in fiscal 4Q17
During Hewlett-Packard’s fiscal 3Q17 earnings call, management stated that it expects the supplies revenue to be flat or rise marginally in fiscal 4Q17 on a constant currency basis. A3 printers are expected to drive supplies growth. The consumption of pages and toner in A3 devices is comparatively higher.
Hewlett-Packard has focused on customer retention in managed printer services, which will likely benefit the company in the long term. Hewlett-Packard manages the printer fleet and supplies for enterprises, which ensures a recurring revenue stream. Hewlett-Packard needs to keep focusing on improving technology to ensure that the printers are catering to customers’ needs in terms of quality, durability, and usage.
In the short term, Hewlett-Packard is making sure that supplies are available to consumers at all times. The company continues to invest significantly to improve its online presence, which has improved its online market share.
Regarding the printing segment, CFO Cathie Lesjak said, “The business delivered across multiple dimensions, reflecting operational progress and sustained momentum as we continue to ignite a renaissance in printing.”