HP Discusses A3, MPS Strategy, Key Executive Retirement

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Last week, HP Inc. reported its third-quarter results, with both earnings and revenue up (see here). HP executives also held an earnings-call conference, during which HP announced the retirement of a key executive, and also discussed HP’s A3 and contractual/MPS performance and strategy.

Stephen Nigro Retiring

HP Inc. President and CEO announced that, after 37 years at HP, Stephen Nigro, president of HP’s 3D-Printing business, will retire in early 2019. Weisler noted that during the past three decades, Nigro helped launch HP’s first Inkjet printers, and led HP in becoming the “number one commercial-grade plastics 3D-printing vendor less than two years after product launch.”

Christoph Schell, a 20-year HP veteran, and HP’s current president of the Americas region, will become president of HP 3D Printing; Schell will assume this new position on November 1, 2018.

Printer Group Highlights

For HP’s Printing group in the third quarter, revenue was $5.2 billion, up 11 percent versus third-quarter 2017. HP’s Weisler noted: “We have made steady progress in the performance of the business and remain focused on managing the portfolio across the core growth and future product categories.”

Weisler also noted that total hardware units were up 12 percent in the quarter, with Consumer units up 2 percent year-over-year n the quarter, and Commercial units up 91 percent year-over-year and 3 percent sequentially . Commercial units include office (including S-Print – previously known as Samsung Printing Solutions), graphic-arts printers, and 3D printers. HP’s Print unit share was 43 percent, up 1 point year-over-year.

Third-quarter printer-supplies revenue was $3.4 billion was up 8 percent year-over-year. However, the supplies mix of total Print revenue was 66 percent, down year-over-year, and nearly flat sequentially, with HP’s Weisler stating that HP continues “to operate below our ceilings for supplies-channel inventory.”

Print operating profit grew $25 million year-over-year and operating margin was 16 percent, down 1.3 points year-over-year, and flat sequentially. The primary drivers of the year-over-year margin decline were the addition of S-Print and the strong unit placements and investments in growth and future initiatives, including A3 and 3D printing.

HP’s Weisler noted that HP’s market share in the A3 market grew 2 points in the third quarter, and 9.1 percent in second-quarter 2018. Weisler noted: “While I’m pleased with that performance and I’m encouraged by our progress that our team is making around our A3 business, we don’t expect that kind of growth each quarter, whereas I’d like to always remind everybody, we’re building a business for the long-term.”

He also noted that HP continues to aim for 12 percent share in the worldwide A3 copier market by the end of 2020.

Weisler noted that although HP’s proposed acquisition of European mega office-equipment dealer Apogee won’t significantly contribute to this goal, HP believes the acquisition will increase its presence in the key contractual copier market, which involves not just A3 copier/MPFs, but A4 copier/MFPs and printers, and that customers often have a mix of both A3 and A4.

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