HP: Triple-Digit Growth for Officejet X Printers, New Toner Supplies to Deter Third-Party Cloning on the Way
December 1, 2014 – Last Wednesday, November 25th, Hewlett-Packard released results for its fiscal fourth-quarter and full-year 2014 (see story here). HP also held an earnings conference call with investors, during which HP Chairman, CEO and President Meg Whitman and HP CFO Cathie Lesjak provided further details on HP’s printing business, including new toner products designed to combat cloning of HP-compatible toner cartridges by unauthorized third parties.
Triple-Digit Growth for HP Officejet Pro X Printers
According to HP CFO Lesjak, HP’s printing division performed largely as expected in HP’s fiscal fourth-quarter, with total revenue of $5.7 billion, down 5 percent year-over-year, and driven primarily by supplies revenue. Overall supplies revenue was $3.6 billion, down 7 percent over the prior year period, due to softer demand and a reduction in channel inventory. As a result, HP ended the quarter with ink- and toner-supplies channel inventory well within HP’s target range.
Total hardware printer unit shipments were down 1 percent year-over-year, partly driven lower revenue from low-end home printers, but offset by continued growth and share gains with higher-value units. HP maintained its number-one market share position with multifunctional printers, both color and monochrome.
Lesjak noted that ink revenue for office inkjet printers and All-in-Ones grew double-digits year-over-year, with triple digit growth for HP’s Officejet Pro X printers. Total printing operating profit remained strong at $1 billion, or 18.1 percent of revenue, up 0.2 points year-over-year.
HP’s overall strategy in printing, is to place higher-value inkjet and laser printers, MFPs, and All-in-Ones, improving the quality of its installed base. It also expects graphics and managed print services (MPS) to continue to be growth drivers for it printing business.
HP CEO Meg Whitman: New Anti-Clone Laser Supplies on the Way
According to HP CEO Whitman, the company’s graphics-printing business, which includes production-printing systems and wide-format printers, “is performing very well, (with) high single-digit growth for much of the year, middle single-digit growth for Q4.”
Whitman also noted that while HP is experiencing declines in revenue from home-focused Inkjet printers and All-in-Ones, HP is growing its revenue from office inkjet printers and All-in-Ones designed for small and mid-size businesses.
The biggest challenge in HP’s printing business, according to Whitman, is in HP’s laser-printer business. As with inkjet printing, HP is focusing on higher-value laser printing systems, which provide a longer installation time (and thus, longer supplies-revenue stream). One problem however with laser units in particular is HP’s aging laser installed base and third-party toner cartridges supplanting HP toner-cartridge revenue. “On the toner side, I think the declines can be attributed to the clones and remands (remanufacturers) attacking on our aging install base, which we’ve been fixing over time, but we still have an aging install base,” said Whitman.
“I think the good news is, we are all over this challenge,” Whitman continued. ” And, we’re focusing on our high-value MFPs where we out-performed the market. We’ve got a great managed print services business where we’re now number-two in the market from number four a couple years ago. And we’re launching a new R series of products with new technology to combat the clones (italics added). “
R&D Spending Up
One point of interest in the conference call was Whitman’s note that HP has increased research and development spending by 10 percent year-over-year – something, the CEO notes, that HP hasn’t done in a long time, and which bodes well for the long-term.