Friday, February 20, 2009

HP! It's the Print, Stupid!

@Imaging Industry Wall Street Insider
"Most readers will be aware of the results announced yesterday during the HP earnings call. Without going into the numbers that are well represented in the public domain, there are a few notes and comments to add to complete the picture. CEO Mark Hurd heaped praise on the services business area, which to their credit performed well relative to the other business areas and to the market in general. He even singled out services as the 'other' attractive annuity business with healthy and steady margins.

Missing the chance for a balanced statement, the original annuity business (IPG) was not even praised faintly, but rather criticized for inadequate execution, especially inventory management. Hardware revenues were hit especially hard, but supplies compensated to a large extent, which is what is supposed to happen. Altogether, IPG operating profits of 18.5% exceeded those of every other business group.

That said, the supplies trend was similar to the rest of the imaging industry, namely disappointing. With hardware sales hurting with double-digit declines, the hoped/expected steadiness of the consumables revenue was soft and turned negative, albeit at a more modest single-digit rate."
Here's the crux of the matter.
While Hurd has his point regarding execution and the necessity to improve the supply chain, it is also true that the IPG business model is still robust, especially at higher volumes. Without earning an explicit mention, one interesting datapoint we spotted was the impressive 25% increase in Indigo page volume.
It's why the Print Output Industry is the one to be in. If HP would spin off IPG, so it could be a clean play on POI, I might consider adding them to my IRA.

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