OEM experiences decline in all areas except personal systems division, with printers and consumables showing year-on-year declines.
Forbes reported on HP’s fourth quarter results, which showed overall revenues declined by two percent year-over-year to $28.4 billion (€22.8 billion) and “division-wide decline across all its reporting segments”, with the exception of its personal systems division where the company reported a five percent growth in total units shipped boosted by an eight percent increase in notebook shipments.
The main reason for the decline in revenue is believed to be “the lack of the much anticipated growth in the server and storage division”, indicating that demand is low for servers, possibly due to the “challenging economic environment across IT services business”.
In particular, enterprise services revenues suffered during the quarter, declining by seven percent year-over-year to $5.51 billion (€4.42 billion), with the OEM’s enterprise group seeing revenues decline by four percent to $7.27 billion (€5.83 billion) and software revenues declining one percent to $1.08 billion (€866 million). The services division makes up 24 percent of the company’s estimated value; with the decline attributed to “key account revenue run off and softness in new signings for the quarter”.
In terms of HP’s printer and ink cartridge division, which makes up 22 percent of the company’s value, a five percent year-over-year decline in revenues to $5.7 billion (€4.6 billion) was reported for printers, while supplies revenues declined by seven percent to $3.59 billion (€2.88 billion). This decline in supplies was primarily due to “reduction in channel inventory from the consolidation of U.S. retailers”, suggesting “some softness in demand in the future”. A one percent year-over-year decline in the volume of hardware unit shipments further contributed to the decline in average selling prices and revenues; and while the commercial hardware unit saw sales grow by five percent, consumer hardware units sales declined by four percent.
The company’s PC division saw PC shipments decline marginally by 0.5 percent in the third quarter, but as previously mentioned the personal systems division grew in both shipment volumes and revenue. As a result, HP reported four percent year-over-year growth in revenues to $8.94 billion (€7.17 billion) against the slight decline in PC shipments in 3Q2014. Operating profit also increased to $355 million (€285 million). The increase in PC sales was attributed to HP clients “looking to refresh their aging installed base” following the withdrawal of support for Windows XP.
Finally, the OEM’s software division saw a “two percent growth in license revenues, three percent decline in service revenues, and one percent decline in support”. This resulted in the division seeing marginal decline in revenues of one percent year-over-year to $1.08 billion (€866 million). The article adds that as HP’s cloud, security, and big data services saw double-digit growth, it is believed “that cloud services are potentially the biggest new revenue source for HP in FY2015”.