Tuesday, November 25, 2008

HP's Fourth Quarter -- bright spots related to Managed Print Services

HP (NYSE HPQ) announced earnings after the market close yesterday, and while the pre-announcement the week prior took some of the steam out of the detailing of their overall excellent numbers, some interesting tidbits are available for perusal. The conference call transcript, as available via the HPQ Investor Relations site or, conveniently, at the Seeking Alpha web site (See "Hewlett-Packard Company F4Q08 (Qtr End 10/31/08) Earnings Call Transcript"), yields some of these. In CEO Mark Hurd's opening remarks, he hits on the condition of the current economy and what that means to HP's business prospects.

...let me highlight three reasons I'm confident in HP's outlook despite the macroeconomic challenges...our business mix. [One reason is] we have approximately one-third of our revenue and well over half of our profits from recurring sources, like Services and Supplies. Although not immune to economic factors, the future performance of these businesses is largely determined by the quality and sale of our customer installed base.

While some skeptics have emerged among today's Tuesday-morning quarterbacks, forcing the stock down some (e.g. see "Hewlett-Packard hit by worries about forecast"), it's worth singling out the printer business, and specifically its growing Managed Print Services (MPS) component, as a major contributor to Hurd's logic. Supplies grew to 64% of the Imaging and Printing Group's (IPG's) revenues, and while that's an across-the-printer-board metric, MPS growth, while not detailed in the release, is certainly growing, with a proxy to be seen it the 25% growth figure announced for Printer-based MFP's, a standout number among otherwise mostly-declining category growth rates.

(This post also appears on Printer Industry News.)

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