3D printing is also termed as an additive manufacturing. This industry is expected to grow at an exponential growth rate in coming future. This technology may be a three decade old technology but it was the year 2009 which changed the future of this industry. Analysts and market researchers anticipate the growth of this industry to reach a mammoth market of $10.8 billion by 2021. Looking at this demand bigger players like Hewlett Packard (HPQ) is also planning to venture into 3D printing business.
HP has always been known as one of the leading manufacturer of printers and now it plans to include 3D printer to further strengthen its product portfolio. The company plans to launch 3D printer by June-2014 and this may also affect various existing manufacturers’ sales as HP will leave no stone unturned to acquire a market share. At present, this market is primarily dominated by 3D Systems (DD) and Stratasys (SSYS) and it is to be seen how long they can be the leader with bigger player like HP stepping into this market.
What looks revealing is the policy of HP to enter the 3D printing market organically. It has no plans of any acquisitions just to rush in the 3D printing market. This policy always safeguards the investor’s interest as acquisition need not means certain growth and it’s a high risk. HP also has a leading advantage over the existing players based on the fact of its size and resource.
The company recently declared its first quarter 2014 quarterly results and was really strong. Overall results in the first quarter were driven by the revenue. It recorded revenue of $28.15 billion beating the consensus estimates by $.96 billion; this is a 4% growth from the comparable quarter previous year. The company recorded an operating cash flow of $3 billion from operations. Such cash flow will always help HP when it steps into 3D printing market. The non-GAAP net earnings per share were recorded as $.90 and were much above the outlook of $.82-$.86 per share that was provided earlier.
The company has made a significant progress laid out by its five year road map. The company has triggered by various innovations and introducing industry-leading technologies in its product portfolio.
The company seems to be setting a foot on the pedal and is focused with innovative strategies; it further joins the cloud band wagon, bug data, security and converged infrastructure.
It is all set to venture into the big market of 3D printing that will make a strong printer portfolio of HP.
HP’s focuses on the 3D Printer
Price and speed has always been a major constraint in the 3D printing industry. HP is focused to provide low cost printers, with significant faster speed to stay cut above from its competitors.
Speed has been a major constraint especially for industrial 3D printers. HP focuses on providing 3D industrial printers that with complete the printing job work at a much faster speed. 3D printing in industries is still a raw market, as industries are bit resistance to embrace this technology mainly because of the printing speed which can delay the job work.
HP is known for its extravagant expenses on research and developments and with the amount of resource with HP, we can expect HP to churn out a 3D printer which will be cost effective and faster.
3D systems (DDD) and Stratasys (SSYS) are currently the market leader and currently ranked at the top of the charts in the domain of 3D printing business. HP will face a fierce competition from these companies when it launches its 3D printers. Both 3D systems and Stratasys are rich with its products portfolio of 3 D printers with a global footprint. From the investor’s perspective, lately an investor has lost confidence in 3D systems. The stock prices of 3D systems have declined drastically in the recent past. Although both of these companies are focused to acquire bigger market start with various strategic moves like joint ventures, new launch and acquisitions. 3D systems had made over 50 acquisitions in past 3 years and since December 2013 it has made 5. This goes on to say that the company is all focused to stay as world number 1 in the 3D printer segment.
HP with its global footprint and leader as a manufacturer of printer will certainly gain from the voluptuous market of 3D printers. The 3D printers from HP is targeted to be in market by mid of 2014, this will always have a positive impact on it revenue growth in the fiscal 2014. The company is rich in cash reserve which also helps it to establish a wider market base with strategic marketing expenses that it will incur post launch of 3D printers.
From the investor’s perspective, HP trades with an attractive PE of 11.96 with an EPS of $2.73. The company also safeguards the interest of the investors by regularly paying dividend and re purchase schemes. In Q1-2014, HP returned $843 million to its shareholders by means of dividends and share repurchase programs.