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HP Eyes the SMB Market – Analyst Blog

Zacks Market Commentaries — Tue, 10 Nov 2009 22:18:18 +0000

Hewlett Packard Company (HPQ) is currently focusing on the small and midsize business (SMB) segment. This has prompted the company to enhance the HP Total Care portfolio, which is expected to enhance the productivity of these companies and at the same time reduce the negative impact on the environment.

This enhancement plan includes new products like two desktop PC’s and display, a new HP LaserJet printer helping to reduce the carbon footprint as well as the cost to the end customer, new server and storage devices for better protection of data, a networking switch and solutions to improve productivity, thereby reducing cost.

Many PC makers are targeting the SMB market, as it offers good opportunity for growth. The latest Lenovo all-new ThinkCentre A70z, is the first all-in-one desktop PC from Lenovo. The company is specially targeting the SMB segment to market this product.

SMBs help in the growth of an economy and offer considerable business opportunities across the globe. HP, although already well positioned to benefit from the growing small and medium businesses, is furthering its prospects in this segment by offering new products.

The company’s strategy seems to be to focus on one business segment at a time, augmenting the portfolio, building relationships and setting it on the growth path. SMB looks like the latest focus area.

A few weeks back, HP enhanced its printing line of business by an addition to the HP Latex Printing Technology portfolio. The newest addition improves the production capability of small and mid-scale digital print and sign shops and photo labs, without the corresponding negative impact on the environment.

This apart, at the recent PRINT 09 tradeshow, the company showcased its latest offerings in its Graphics Solutions Business. The company believes that these products address the $115 billion potential global market opportunity for digital color printing.

The printing business has not performed well in recent quarters and has come under pressure due to strong competition from brands like Lexmark International Group (LXK), Epson and Canon (CAJ). The recent introduction in the category is a strategic move to attract new business.

We believe that with the gradual revival in IT spending and strategic business moves, the company is well positioned to achieve its fourth quarter guidance.
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HP Focuses on Printing – Analyst Blog

Zacks Market Commentaries — Mon, 14 Sep 2009 20:15:36 +0000

Hewlett-Packard Co. (HPQ) seems to be concentrating more on its printing business recently. In the recent PRINT 09 tradeshow, the company showcased its latest offerings in its Graphics Solutions Business. The company claims, this segment addresses the $115 billion potential global market opportunity for digital color printing. So this segment offers enough business opportunity for the company.

The company also highlighted technology, products and industry relationships in the Graphics Solutions Business like, HP T300 Color Inkjet Web Press, a 30 inch wide, color inkjet printing device and the new ColorPRO Technology, which is used in the HP T300 Color Inkjet Web Press and HP Designjet printers. The company declared the introduction of HP Indigo W7200 Digital Press, a liquid electrophotographic printing (LEP) solution for offset quality digital press printing.

Hewlett-Packard also disclosed a new alliance with the leading document management company, Pitney Bowes which will help to accelerate the HP T300 Press penetrate in the digital print and offset market. This apart, the company also introduced a new HP Graphics Solutions Partner Program, which is expected to increase the efficiency of the graphics solution workflow process.

Hewlett-Packard recently entered into a strategic agreement with Toshiba. As per the agreement, Toshiba will be able to sell HP’s laser jet product line to customers. This agreement expands and strengthens Toshiba’s overall product offering while also expanding the reach of HP products to more customers. This new partnership will prove beneficial to both dealers and customers, as the dealers will be able to avail of discounts, which will be transferred to the end customers. So Hewlett-Packard is trying to create a win-win situation for all the parties involved in its printing business.

Hewlett-Packard’s third quarter results were modestly above the Zack Consensus Estimate. The company provided a better-than-expected fourth quarter outlook. On the other hand, the company did not do well in its printing business, where revenues fell 19.6% year over year. Both ink supplies and hardware posted double-digit declines. We believe the segment has come under pressure due to strong competition from brands like Lexmark International Group (LXK), Epson and Canon (CAJ). Printer unit shipments decreased 23% in the recently concluded quarter, with both Consumer and Commercial printer hardware units down 16%. So we are witnessing a clear effort from the company to revive its printing business.
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HP Launches New Print Apps – Analyst Blog

Zacks Market Commentaries — Thu, 10 Sep 2009 18:03:10 +0000

Hewlett-Packard (HPQ) recently said it would launch a new Print App and an App Studio portal for the holiday season to enhance web printing, helping consumers to print customized content without a PC.

The print App software is designed to work with HP’s high-end printers. To improve the speed and reduce cost of digital printing, the company had earlier unveiled graphic arts technologies and products to support its Print 2.0 strategy. HP’s Photosmart Premium with TouchSmart Web is already available in the market. The company is manufacturing commercial and specialty digital printers to work with the Photosmart and TouchSmart.

HP’s Photosmart Premium printer with TouchSmart Web will be available for $399. The new Photosmart printers feature touch technology that help users to display as well as edit and print photos and enable them to copy and scan documents. Other wireless printers are available within the range of $129 to $199 through Staples Inc. (SPLS), Best Buy (BBY), Office Depot (ODP), OfficeMax (OMX) and Amazon.com (AMZN) stores.

Hewlett-Packard also announced a host of partnerships with AOL to get Tabbloid publishing services to its sites. Moreover, it entered into an agreement with Yahoo’s (YHOO) Flickr to expand print services through Snapfish by HP.

HP's most profitable business is the Imaging and Printing Group, which boosted revenue by 6.4%, resulting in an operating margin of 15.6% in fiscal 2008 — the highest across all segments. The company is also the largest seller of printers (31% of total sales), with a 41% share of the global market. HP’s new printing solution bolsters its efforts to target the estimated $663 billion print production page value opportunity projected for 2010.

While printing is a growth area for the company, we believe the significant pricing pressure on the hardware for printers may hurt its profitability in future. We thus remain concerned about the long-term growth prospects of the printing unit.

Moreover, HP faces intense competition in its printer business from Lexmark International Group (LXK), Epson and Canon (CAJ). It is also up against Kodak (EK), which plans to increase its share in the printer market with the launch of a new digital-inkjet printer, Stream, next year. Therefore, we maintain our Neutral rating on HP.

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