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HP Printer + PC Sales Down As Company Struggles To Find Growth

HP Printer + PC Sales Down As Company Struggles To Find Growth

Second-quarter sales shrank 6.8 percent to $25.5 billion while net income fell 21 percent to $1.01 billion from $1.27 billion a year earlier HP announced overnight.

All of Hewlett-Packard’s units posted revenue declines in the quarter.

Personal systems group sales fell by 5.3 percent, and printer unit revenue dropped 7 percent. Enterprise group sales also slipped. The only bright light was server sales that rose 11%.

Hewlett-Packard’s main businesses — selling servers, software and personal computers — have been weakened by the twin forces of cloud computing and mobile devices.

HP Australia has been running a major discount battle at retailers in an effort to hold onto market share, profits have declined. The US Company who is not seen as a player in the tablet or smartphone market is facing further pressure with both Lenovo and Acer set to launch new PC’s in coming weeks that will put further pressure on a new range of PC’s from HP. 

The company who is splitting into two entities — one selling PCs and printers, and the other supplying technology to businesses — by the end of the year, is hoping that the move will end declines in several categories. 

To shore up growth in the meantime, the company has released new mobile devices targeted at businesses, and acquired wireless-networking company Aruba Networks to help it compete with Cisco Systems in the networking market. 

“I don’t see many bright spots,” said Dan Morgan, a senior portfolio manager at Synovus Securities Inc., which owns 288,020 shares of the company.

Cash flow from operations was $1.5 billion, down 51 percent from a year earlier. The company is maintaining its free cash flow forecast for fiscal 2015 at $3.5 billion to $4 billion.

Since announcing its intention to split in October 2014, Hewlett-Packard has faced global weakness in the PC market and rapid growth in cloud computing, where lower-cost server makers are winning data-centre business. 

 Jayson Noland Sr., a senior analyst at Robert W. Baird & Co said “They really need to make three or four or five acquisitions like Aruba and then successfully stitch them all together,” Noland said.