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August 24, 2018updated 29 Aug 2018 8:25am

HP Sees Margin Opportunity in Services, Continues 3D Printing Push

HP eyes increased push into services amid tight PC margins

By CBR Staff Writer

HP’s global sales rose 12 percent to $14.6 billion in the quarter ended July 31, with PC demand growing solidly, despite the headwind of raw material costs and increased currency volatility, the company has reported.

It was the tech giant’s printing division that performed particularly strongly however: printing net revenue was up 11 percent year-on-year, with commercial printer hardware unit sales up 91 percent (at a 16 percent margin).

See also: HP Buys UK’s Apogee in £305 Million Deal

With the operating margin of the company’s Personal Systems division, which includes PCs, a tight 3.9 percent in the quarter (improved year-on-year, but still hardly indicative of a high margin business), shares fell on the report; CEO Dion Weisler told analysts to expect a “more challenging second half”.

The company’s CEO said on an earnings call that “we’re laser-focused on increasing productivity and taking cost out of the business.”

HP is cutting up to 5,000 jobs by 2019 to lower costs, while revamping its product lineup. “Over the long-term, we expect that services is a more margin-rich opportunity for us”, the company added.

HP Earnings: 3D Printing Push Continues

The Palo Alto-headquartered company has been pushing strongly into 3D printing and its CEO said he was pleased with progress in accelerating 3D printing for production manufacturing.

3D printing

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“We drove installations with industrial-grade customers, including the new 3D printing center in China, the world’s largest manufacturing market.”

“We are encouraged by the increasingly wide array of final part applications across sectors, including the industrial, consumer, auto and healthcare markets. We’re seeing north of 50% of the parts produced on our systems are for final production.”

He added: “Ensuring the world’s industrial product engineers have integrated design tools for 3D production is a critical enabler for market expansion. We are still in the very early stages of this business, but remain excited and optimistic with our ability to disrupt the $12 trillion global manufacturing market.”

Global PC Market Recovering

Overall, net earnings were $900 million for the quarter, up 26 percent on the same period in 2017.

Analysis by Gartner shows that the global PC market finally showed modest year-over-year growth of 1.4 percent in Q2 2018 after a six-year slump.

This broader industry growth was driven by demand for business PCs – particularly strong in the UK and Germany – which was offset by a decline in consumer PC shipments as consumers increasingly use smartphones for classic PC applications.

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