Saturday, February 20, 2010

Why I wish HP would spin off the Print piece.

I got to the following by following links from my ChangeForge daily email alert.

From ONN.TV
A look at HP’s quarterly numbers, by division

Hewlett-Packard Co.’s 25-percent jump in net income in its November-January quarter was driven by better numbers in most of the technology company’s major divisions. Here are some highlights on those divisions:

– Services: Revenue slipped 1 percent to $8.7 billion. Operating profit rose 27 percent to $1.4 billion.

– Printers and ink (Imaging and Printing Group): Revenue rose 4 percent to $6.2 billion. Revenue from ink and other supplies was up 1 percent. Ink is one of HP’s biggest moneymakers. The division’s operating profit was flat at $1.1 billion.

– Computer servers and storage (Enterprise Storage and Servers): Revenue rose 11 percent to $4.4 billion. Operating profit rose 36 percent to $552 million.

– Personal computers (Personal Systems Group): Revenue increased 20 percent to $10.6 billion. Operating profit jumped 22 percent to $530 million.

– Software: Revenue was flat at $878 million. Operating profit rose 19 percent to $167 million

– Financial services: Revenue increased 13 percent to $719 million.



Printers and Ink ( Imaging and Printing Group) are the wrong buckets. I don't know much about the ink business, but my bet is that margins are only going lower. On a global scale it might turn out to continue to be the great cash generator as before. If I had to bet on it, I wouldn't.

But the presence of the Indigo and now the digital web presses say to me that HP may have a very defensible position in the under appreciated Print industry. Suffice it to say that my Print-centric IRA is well over 100% up since I started managing it about a year ago.

If HP gave me a way to invest in the Print piece instead of all the other complicated opaque (2me) businesses, it would be grand.
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3 comments:

  1. Ken StewartFebruary 21, 2010 at 10:09 PM

    Hah! That's hilarious!

    Regards,
    Ken Stewart
    http://ChangeForge.com

    ReplyDelete
  2. Michael JFebruary 21, 2010 at 11:26 PM

    Thanks for stopping by. Hope all is well. I'm going to change the name to a live link.

    ReplyDelete
  3. AnonymousFebruary 24, 2010 at 7:56 PM

    I have often wondered what would happen if HP decided that it wanted to wield its sword on the MPS communities takeover of its once highly profitable toner business. Boiled down to the basics the whole premise of MPS is one of "we can't sell you a new machine that's better or cheaper than the fleet of HP's you already own, we'll just steal the annuity stream from HP". Which has always made me wonder why these steps which seem so obvious has not taken taken by HP already:

    > Drop the prince of toner 35%, or some number that takes the wind out of the sails of the MPS non-OEM toner profit margin.

    > Start a new "HP goes green" program in which HP starts its own cartridge recycling and "HP certified" recycled toner cartridge program. Heck if the Joe Blow company can make a profit recycling HP cartridges, HP should be able to make more money using original OEM parts and toner.

    HP seems to be in as good a financial shape as anyone in the market space. And given that they could afford to piss away what I've been told was over a billion dollars on the EdgeLine flop without anyone raising a stink it seems they could afford to fight the MPS takeaway.

    ReplyDelete

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