Hewlett-Packard Company (HPQ, Financial), the American multinational information technology giant, provides hardware, software and services to consumers, small- and medium-sized businesses (SMBs) and large enterprises, including customers in the government, health and education sectors. The company has many sources of revenue, but still struggled to reward investors in the last few months. The increasing strength of the U.S. dollar along with the declining of the PC market has troubled HP. However, the company can still find a way out of its slump. Let’s take a look how.
Revenue and earnings
The company delivered total revenue of $26.8 billion, which is down 5% year-over-year or down 2% in constant currency. Even with currency fluctuations, they continue to upsurge their R&D investments. The company enhanced profitability year-over-year. The company is approaching the completion of a restructuring plan launched in 2012.
Personal systems revenue grew 3% whereas commercial revenue was up only 1% in constant currency. Non-GAAP operating profit and gross margin was up 0.3 points and 0.6 points year-over-year to 8.8% and 23.4% respectively. Gross margin was down 1.2 points quarter-over-quarter.
Reducing Workforce
In the Q1FY15, nearby 2,800 employees departed the company making the overall reduction to date approximately 44,000 people. The company expected to complete this current program with a total of 55,000 people to exit by the end of fiscal 2015.
3D Printing
HP is tipped to enter the 3D printing market soon. Given the company’s huge R&D expense, it can easily take the market by storm and trouble troubling market leaders like 3D (DDD, Financial) and Stratasys (SSYS, Financial). HP claims that Multi Jet Fusion is 10 times speedier than today's driving expulsion based and specific laser sintering advancements, which will target modern and expert markets. HP additionally has more than three times as much money on its accounting report than the 3D printing industry produced in overall revenue in 2014.
In 2014, the 3D printing industry raked in $4.1 billion in overall revenue, and it is expected to grow around 31% per year until 2020, in the long run surpassing $21 billion in yearly revenue. By 2017, the first entire year that HP's 3D printer is relied upon to be accessible; the 3D printing industry is anticipated to produce revenue upward of $9 billion.
Benefiting from cloud
The overhaul in the public cloud has begun as Hewlett-Packard proclaimed it is leaving the public cloud business. Even after acquiring Eucalyptus, an open source solution for connecting OpenStack clouds to Amazon (AMZN, Financial) Web services, the company had never performed very well in public cloud.
HP had never gained grip in the business, having proclaimed its Helion cloud late. After acquiring Eucalyptus in September 2014, Marten Mickos was made in charge of its cloud strategy. Mickos lasted less than six months, departing in February. The Helion operation is now in the guidance of Bill Hilf, who was earlier general manager for Microsoft's (MSFT) Azure cloud.
Conclusion
Although HP is struggling, the company has taken reasonable measures to overturn its deficits. The strong U.S. dollar can trouble the company; however, it is cutting back on expenses and entering the fast growing 3D printing industry. The company has a vast R&D budget and can easily replace the market leaders.
Investors may be worried that 3D printing stocks could have much to lose once HP's 3D printer goes available to be purchased. What isn't clear, however, is the degree to which HP's passageway could hurt made 3D printing organizations. Shockingly, it’s difficult to realize that reply.
