Management in the Companies Australian consumer PC division decided late last year to use discounting as a means to compete up against new entrant Lenovo, the move failed.
Entering the market late in October 2015 Lenovo the #1 global PC market, has seen their share of the premium end of the PC market grow at the expense of both Hewlett Packard and Toshiba.
According to JB Hi Fi management the entry of Lenovo into the PC market has seen the premium PC category grow by up to 40%.
HP Australia who were fined $3M by the Australian Competition + Consumer Commission for misleading consumers over their warranty rights has been haemorrhaging losses over the last three years, losing almost half a billion dollars.
In its latest report to ASIC, H-P said it posted a net loss of A$152 million in its 2014 financial year, ended last October, and follows a $270 million loss in fiscal 2013, and a $58 million loss in FY 2012. The last time the company made a profit was in FY 2011, when it made $134 million.
Last year, H-P made the decision to write off $161 million in deferred tax assets and was subsequently hit with a hefty tax bill of $165.9 million for that year.
According to the financial filing, there were “no significant future events” that would “cause management to conclude that past performance was not an appropriate indicator of future performance”.
Revenue actually grew from $3.3 billion in fiscal 2013 to $3.6 billion in H-P’s most recent financial year, thanks to increases in both product and services sales.
However costs rose from $3.4 billion to $3.8 billion, mostly due to increased cost of inventory.
Looking on the brighter side their overall revenue which includes services and enterprise computing, did grow slightly to $3.6 billion in fiscal 2013 from $3.3 billion posted previously, however, their costs were raised from $3.4 billion to $3.8 billion – reportedly due to increased cost of inventory.
Analyst firm Gartner explains that HP’s proposed split into two separate companies, one for hardware and one for its services operations, will do little for its success and provide no assistance to its “shortcomings in cloud, mobility and SaaS.”
Gartner also explains that “HP has stabilized, but is unable to deliver new sources of profitable growth to offset declines in its core businesses. HP’s separation may benefit shareholders, but large HP-centric customers now have to deal with two companies, and the separation has raised concerns of further divestitures after it is completed.”
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