HP Profits UP 14%, IPG Revenues Decline 15% but Profit Remains Steady

Fresh after last weeks stunning numbers, Canon Down 54%, Ricoh Down 69%, Xerox Down 50% - Profits? We Don't Need No Stinkin Profits..., HP and IPG, make the scene in a relatively rosey manner.

If by "rosey", you mean a 15% decline in revenue...


From the transcript, Catherine A. Lesjak - HP Executive Vice President and Chief Financial Officer:

"...Turning to imaging and printing, IPG continues to deliver over $4 billion in operating profit annually with Q4 operating profit totalling $1.2 billion or 18.1% of revenue. In Q4, revenue improved 14% sequentially to $6.5 billion as printer demand begins to pick up. We are reinvigorating the core business by driving adoption in high page output areas such as wireless printing, office jet pro, and multi-function printers.

In addition, we are driving growth in long-term, high value annuity businesses such as managed print services and retail publishing. We have been expanding our retail publishing pilot with Walmart. We have begun to deploy our self-service photo kiosks at Walmart and this win, coupled with other major retail publishing wins such as Kesko, Duane Reid and K-Mart Australia represents a significant proof point in IPG's scaling of its contractual businesses.

Operationally, IPG is in much shape as it enters 2010.

It has made significant progress in its cost structure, inventory management, and overall operational rigor. These improvements give us capacity to invest in unit placements while maintaining industry leading profitability. Going forward into Q1, we expect to have double-digit unit growth while at the same time delivering operating profit in the range of 15% to 17% as we outlined at our analyst meeting in September..."
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Imaging and Printing Group (IPG) revenue declined 15% to $6.5 billion.

Supplies revenue was down 8% while Commercial hardware revenue and Consumer hardware revenue declined 32% and 17%, respectively.

Printer unit shipments decreased 20%, with Commercial printer hardware units down 38%and Consumer printer hardware units down 14%.

Operating profit was $1.2 billion, or 18.1% of revenue, versus $1.2 billion, or 15.3%of revenue, in the prior-year period.

So, it looks like even with a 32% decrease in revenu(Commercial hardware), Operating profit remained steady at $1.2b compared to $1.2b last year.

Further investigation reveals that HP experienced a 8% increase in services revenue and HP Financial increased 5%.


Good review here.