HP Struggles Despite New Spectre Notebook, Profits + Revenues Down
PC maker Hewlett-Packard who have been having a lot of success with their new Spectre notebook, is set to report a 23% decline in profits and up to 15% decline in revenues.
In Australia, retailers such as JB Hi Fi are reporting “excellent demand” for the Lenovo notebook range along with the new HP Spectre notebook which comes with a “tizzy” gold and black design.
Analysts expect the former Hewlett-Packard Co. printing-and-personal-computer business to continue a recent pattern of revenue declines when it reports quarterly financial results on Wednesday, the latest evidence of waning demand for those products.
Cathie Lesjak, HP’s CFO claims the company is not interested in growth at the expense of profits. In Australia the local Hewlett-Packard subsidiary reported a $229 million financial loss for its 2015 fiscal year this was the companies fourth straight year in the red.
The figure adds to the almost half a billion dollars in losses HP Australia posted in the three years prior to the 12 months ended October 31 2015.
The company last made a profit locally in 2011.
HP, the second-largest PC maker behind Lenovo gets most of its revenue from sales of printers and PCs but the problem for the US company is that the market has been shrinking.
The company has also admitted that HP takes in revenue from customers significantly faster than it pays suppliers of components to build the systems it sells, this allows the breakaway company to manage their cash flow despite a major slump in sales and profits.
Dion Weisler, HP’s chief executive said recently that More than half of HP’s profit comes from printing, primarily sales of ink and toner that generates a steady flow of cash.
The company has estimated it will generate $2 billion to $2.3 billion in free cash flow for the fiscal year ending in October.
The company expects global quarterly revenues to fall 8% to US$11.4 billion and net income to drop 23%.
Mr. Weisler told the Wall Street Journal that he hopes to spur growth by building a franchise beyond desktop-oriented inkjet and laser printers toward the bigger copying and printing systems that serve entire departments. In a longer-term bet, the company has announced plans to enter the newer market for 3-D printers.
In PCs, Mr. Weisler said, HP plans to focus on growing, profitable segments such as high-end gaming systems and premium laptops while avoiding low-margin, me-too products such as low-end tablets.