HP's 3rd quarter results hurt by budget PCs
updated 05:30 pm EST, Mon November 23, 2009
HP Q3 2009 shipments up, revenue down
HP this afternoon revealed mixed results for its quarter ended in October. The company's net earnings climbed 14 percent year-over-year to $2.4 billion, but its revenue dropped by 8 percent to $30.8 billion in the same time frame. It credits the profit boost to cost-cutting measures but saw its revenue drop across the board in every category, including the Personal Systems Group that handles its common PC business.
The division shipped 8 percent more PCs than a year earlier, enough to keep its lead in market share, but suffered directly from a heavy dependence on budget PCs such as netbooks. Its revenue dropped 12 percent from year-to-year to $9.9 billion, and its profit dropped a sharp 25 percent to $460 million. Desktops took the deepest hit as revenue for the category fell 16 percent where the notebook category, which includes netbooks, dropped a softer 8 percent.
The Palo Alto-based firm also warned of further declines in the fall. Although higher than analyst predictions, it expects its revenue to decline again to between $29.6 billion and $29.9 billion and its relative profit per share to drop as well.
HP's success in market share is widely attributed to its strong presence at retail with economy notebooks and desktops but has also increasingly counted on its Mini netbook range. This includes carrier deals such as with AT&T and Verizon that subsidizes the portables to an even lower price, albeit at the networks' expense.
Contrasting against the results is Apple, which posted sharp increases in both areas based both on the rise of its iPhone business as well as its emphasis on lower-volume but more profitable Mac sales. It forecasts both an increase in revenue and a disproportionately larger profit.
The title tells the tale...
11/23, 06:07pm reply
Shipments up, revenue down. Why analysts were so set on Apple building crapper netbooks and really low cost computers because every other company was doing so is beyond me. They are total fools to ask such a thing. Manufacturing, materials costs and decent customer service costs can't be cut but so much. Trying to undercut everyone else to sell more product is such a poor business model. Certainly the Windows computer companies are getting killed by it. They should never have started selling them by mutual agreement throughout the industry.
iphonerulez
Fresh-Faced Recruit
Joined: Nov 2008
Vindication in spades...
11/23, 06:14pm reply
If this isn't vindication for Apple's business model then I don't know what is. Produce quality, innovative products; provide superior customer service; charge a fair price. Ride out the recession in style while others struggle with scouring the bottom of the barrel for profits.
lkrupp
Fresh-Faced Recruit
Joined: May 2001
When you race to the bottom...
11/23, 09:27pm reply
...sooner or later you reach it.
~Philly
phillymjs
Fresh-Faced Recruit
Joined: Jun 2000
Are you serious???
11/24, 01:01pm reply
They should never have started selling them by mutual agreement throughout the industry.
Yes, that's what we want. A coalition of computer manufacturers getting together to decide what computers should be sold, for how much, and to whom.
And all they'd need to do is move all their companies to other parts of the world so they're not controlled by stupid laws designed to protect the consumer from such anti-trust and monopolistic-type behaviors.
The reason that so much of the market has gone cheap is because the consumer has realized that cheap computers are good enough to do what they need computers to do. Especially in the world of the internet and cloud computing, you don't need a $2000 computer when a $500 one will do just fine, just as many people found out long ago that a $50 coat from WalMart will keep you just as warm as a $500 coat from some fancy designer.
testudo
Fresh-Faced Recruit
Joined: Aug 2001
Re: Vindication
11/24, 01:05pm reply
Ride out the recession in style while others struggle with scouring the bottom of the barrel for profits.
Wow, I guess no one reads anymore.
HP made 2.4 BILLION dollars last quarter. Their revenue was $30 billion. Thier profit was up over last year.
How exactly is this 'struggling' and scouring for profits? Esp. since they made more money than Apple?
testudo
Fresh-Faced Recruit
Joined: Aug 2001