HP NYSE HPQ Printer Metrics end of year FY08 edition

After the markets close yesterday, HP (NYSE HPQ) announced its previously-pre-announced earnings for Fourth Quarter FY08. The overall numbers were quite heartening in this era of economic fear and doubt (see "Hewlett-Packard confirms earnings, backs outlook"), and the numbers from Imaging and Printing Group (details below) was more of a mixed bag.

Fourth-quarter IPG revenues actually declined one percent, compared to Q407, and with the companys overall revenues continuing to show very healthy increases, the printer units proportion of company sales shrinks again. Margins, however, remain robust for IPG, contributing nearly half of HPs profit dollars.

And its always interesting to see which details HP chooses to share about the business. Color laser printers were reported as DOWN a few percentage points, but with HPs emphasis on its inkjet technologies both high and low, one wonders if this is a bragging point (lower lasers mean higher inkjet sales?). Both consumer and commercial hardware units showed year-to-year sales declines, and with supplies up another 9%, that category now represents nearly two-thirds (64%) of overall IPG revenues. And HPs interest in wireless printers (see "HP is Wild About Wireless") is confirmed by its inclusion in the metrics matrix for the first time.

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Hewlett Packard HPQ Quarterly Printer Metrics through Q1FY2013

While my last few posts involved the HP Analyst Summit in Boston last week (and there will be more to follow), this one represents a bit of housekeeping. HPs Q1 earnings were announced in late February, and I had been woefully behind in updating my Google docs spreadsheet which tracks all of HPs quarterly printing-related metrics since the first quarter of 2006. The "goodies" below product line detail, like color laser printer growth, all-in-one trends, and Indigo pages printed are long gone, but the higher level figures tell a story too. And while the mood at the summit was upbeat for printing and imaging, overall, the end-of-January quarterly numbers were some of the worst ever - hitting bottom perhaps? For example, revenues under $6 Billion was the first time below that water line since 2009. More color to come, but here is my spreadsheet for your perusal.

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HP Printer Comments and Metrics Q1 2011

First of, my print-related excerpts of the analysts conference call transcript, available at Investor Relations at HP.com. And then the inclusion of my customary updated metrics table.
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From CEO Leo Apotheker’s opening remarks:

[Regarding consumer businesses,] The enthusiasm and anticipation for webOS exceeded even our most optimistic expectations. We look forward to providing a differentiated seamless experience across our tablets, smartphones, printers, PCs, and future form factors.

[As far as top line revenue,] We continued to see good performance in our commercial hardware businesses, led by strength in converged infrastructure and commercial printers and PCs. We posted solid double-digit revenue growth across these businesses, with Enterprise Servers, Storage and Networking growing 22%, and commercial printer hardware and PSG commercial revenue increasing 13% and 11%, respectively.

The Imaging and Printing business delivered strong performance in the first quarter with revenue growth of 7% to $6.6 billion, led by commercial revenue growth of 13% and supplies growth of 7%. Segment operating profit totaled $1.1 billion, or 17% of revenue. Total printer unit shipments increased 13% with commercial and consumer printer units up 33% and 7%, respectively, as we gained market share across all printing categories with particular strength in higher usage segments.

We continue to see solid momentum in our growth initiatives and to lead the market with innovative new products. Our graphic arts business grew double- digits and we are pleased with the momentum in our web press business. Our color laser and multi-function printer units grew 20% and 63%, respectively, while business inkjet unit shipments increased double- digits from the prior year and shipments of wireless printer units more than doubled. In addition, we shipped more than 3 million web-connected printers in the quarter. We will continue to target these markets aggressively, leveraging our technology leadership to drive the shift from analog to digital printing.

Q&A between Aaron Rakers, analyst of Stifel Nicolaus and Cathie Lesjak, HP CFO, and Apotheker – since it was the final question, Apotheker wrapped up the day’s remarks:

Rakers: Yes, thanks, guys. I apologize, Im going to go back to actually Keiths question earlier. So just to be clear, Cathie, you talked about low single digit growth now in the Services business. I think at the Analyst Day you talked about 2% to 4%. If I do the backwards math, that would be about $700 million, $750 million in revenue shortfall. That leaves you about $1 billion left spread across the segments. I guess my question is, are you still confirming your 7% to 9% growth expectation in Enterprise, Server, Storage and Networking as well as the 3% to 4% growth target for the Imaging and Printing segment for fiscal 2011? Thank you.

Lesjak: So, Aaron, on earnings calls, we dont typically update our guidance relative to the segments. Ive laid out for you, or weve laid out for you, the guidance for Q2 and a full fiscal year from a revenue perspective. I dont have anything more to add to that.

Apotheker: So this is -- let me just wrap this call up by sharing with you some final thoughts. HP delivered strong margins, earnings and cash flow performance in the quarter and our operational discipline is intact. We continue to show strength in our core markets. Were winning in the data center, were capturing the share of the printed pages moving from analog to digital and were well positioned as the world of cloud and connectivity converge. As we discussed, we have some work to do in a couple of areas and Im confident in our ability to execute our plan. I look forward to sharing more of our strategy with you at our March 14 Summit.

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