Amid Layoffs, HP Seeks ‘New Use Cases’ for Consumer Printing

As Hewlett-Packard braces to lay off 9,000 employees by October as part of a staggered restructuring that will eliminate some 27,000 jobs by the end of 2014, its Personal Systems Group saw “a recovery” in desktop sales and the commercial segment, Chief Financial Officer Catherine Lesjak said on the company’s fiscal Q2 2012 earnings call. PSG revenue was flat year over year as commercial revenue grew 3 percent, and consumer revenue dropped 4 percent, she said. Desktop unit sales were up 5 percent, offset by a 6 percent unit fall in notebook PCs, she said.

With “much less impact from the HDD shortage,” HP “executed well” and realized a 2-point sequential gain in worldwide PC market share in calendar Q1, CEO Meg Whitman said. In the process, the company reclaimed the No. 1 share position for commercial PCs globally, and also took that spot in the U.S. commercial business from Dell, which she called “a competitor who’s held the top rank for more than one decade.”

HP continues to face a “weak demand environment” in its Imaging and Printing Group, Whitman said. Year-over-year IPG revenues slid 10 percent due to weak consumer demand and “natural disasters,” Whitman said, adding that the company is working on new pricing models, services and solutions to differentiate product offerings. Citing the previously reported drop in home printing, Whitman said, “As an industry leader, we need to act like one.” She said the company will step up marketing, “take responsibility” for the category and demonstrate “new use cases for printing.” That includes getting “our pricing correct” on ink and printers and making sure “we've got the right product at the right time for the right market,” she said. Consumer printer revenue was down 15 percent year over year, Lesjak said.

HP sales fell 3 percent to $30.7 billion in fiscal Q2, which ended April 30, from the year-ago quarter, the company said. Profit plunged 31 percent to $1.6 billion, while operating margin slipped 2.2 percent to 7.2 percent, it said. HP shares closed 3.3 percent higher Thursday at $21.77.

While HP treads water in the PC market -- and after Dell reported disappointing sales numbers earlier in the week -- Lenovo continues its market rise. The China-based PC maker posted sales in the year ended March 31 of $29.6 billion on Thursday, a 37 percent jump year over year, finishing the year “as the world’s second-largest PC vendor” with market share of 12.9 percent, it said. Profit jumped 70 percent to $473 million for the year, the company said. Lenovo executed its “protect and attack” strategy in new and emerging markets, said CEO Yang Yuanqing, while achieving “balanced growth in all geographies, customer segments and product lines."

The company said it has 32 percent of the China PC market, compared with 9.6 percent for Dell, 9.3 percent for Acer, 6.9 percent for HP and 6.4 percent for Asus. It cited IDC and internal Lenovo data. In its different geographies, Lenovo reached 10 percent market share in mature markets for the first time, it said, and topped 10 percent share in consumer sales worldwide, also a first. Lenovo strengthened its No. 1 sales position in emerging markets where it has a 10 percent or greater share in 15 markets, it said. Lenovo’s share in smartphones and tablets grew sequentially in China, from 7.5 percent to 9.5 percent, and it posted “solid” tablet gains from 45.3 percent to 48.7 percent market share sequentially, the company said.

Lenovo’s strategy for the current fiscal year is to expand its consumer and small-to-medium business segment, “move to profitability,” and grow its mature-market share by expanding retail distribution, the company said. In its Mobile Internet Digital Home group, Lenovo plans to launch a smart TV this month, expand cloud offerings worldwide and grow its smartphone and tablet business in China, it said.