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COVID-19 Could Be Final Nail in Coffin of HP’s Printing

HP Inc.’s printing business could be finally running out of ink, thanks to COVID-19. Profits in the venerable Silicon Valley tech company’s struggling printer business dipped below profits from PCs for the first time in at least five years in the most recent quarter, as most corporate offices shut down during the coronavirus pandemic. The current quarter is expected to be even worse for printing, once the company’s cash cow.

COVID-19 could be final nail in coffin of HP’s printing business

HP reported an 11% drop in its fiscal second-quarter revenue Wednesday, as supply-chain disruption issues and a loss of corporate PC and printer sales impacted the quarter. The company’s stock tumbled 5.7% in after-hours trading.

Even though HP’s laptops have been in demand as more people work from home, the company said that sheltering in place was having a negative impact on its corporate printing business. Printing, especially printer supplies, has long been a money-maker for HP, which sells high-margin ink cartridges to its printer customers. But in the past few years, as both consumers and businesses print less, printing revenue and profits have been on a gradual decline. That led the smaller Xerox Holdings Corp. to pursue a hostile takeover offer earlier this year in pursuit of growth, an offer that was ultimately quashed by the global pandemic.

In the fiscal second quarter, HP said that its pre-tax profits in printing were $548 million, down nearly 35% from $839 million in the year-ago quarter. Pre-tax profits for PCs, however, were up 43% to $552 million, from $385 million in the year-ago period.

Printing revenue also saw a steep drop, tumbling 19% to $4.1 billion, compared to a 7% decline in revenue for personal systems, to $8.3 billion. Notebook sales were flat while PCs and workstations, used in the office, both fell by double digits. HP said it did see strong demand in consumer printing and supplies, as consumers went into lockdown around the world, but it was not able to fulfill all of its orders because of manufacturing disruptions.

Source: FXPro


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