HP Sales Down on Weak Printer, PC Revenue

The company plans to lay off 3,000 workers this year, producing $300 million in savings by 2017.
Katie Kuehner-HebertFebruary 25, 2016
HP Sales Down on Weak Printer, PC Revenue

While HP adjusts to life as an independent company after the divestiture of the business-oriented operations that now constitute Hewlett Packard Enterprise, its first-quarter results still reflect weak conditions in its flagship printer and personal computer products.

The Palo Alto, Calif., company said earnings from continuing operations declined 16% in the first fiscal quarter ended in January, while revenue fell 12% from the year-earlier period. Total printing revenue declined 17%, with revenue from ink and other supplies down 14% and hardware unit sales off 20%. HP’s PC revenue declined 13% in the first quarter.

Earnings on an adjusted basis that excludes restructuring charges came to 36 cents a share, above projections but down from 41 cents per share for the same quarter a year ago. Revenue came to $12.2 billion.

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HP said the strong U.S. dollar was a big factor in its results. On a constant currency basis, the company said total revenue was down only 5%.

HP’s chief executive Dion Weisler told The Wall Street Journal that printers and PCs face headwinds that won’t go away soon.

“In printing, which accounts for about 80% of the company’s profits, sales of both hardware and ink have been hurt by the changing habits of computer users and by competition, particularly from Japanese rivals whose products have gained a pricing edge over HP due to shifting currency rates,” the WSJ wrote. “In PCs, HP and other hardware makers continue to suffer from a gradual slide in demand since spending began shifting to smartphones and tablets several years ago.”

HP is introducing new products to spark consumers’ interests, including a large-screen smartphone and 3-D printing.

On its earnings conference call on Wednesday, HP said it was speeding up its announced layoffs. It expects to cut 3,000 workers this year, after previously saying those cuts would be spread out over three years.

CFO Catherine Lesjak said the layoffs will produce $300 million in annual savings by the beginning of 2017.