HP revenues down for the fourth consecutive quarter ahead of November 'divorce'

Steady as she sinks! HP revenues slide again, with only servers and networking exhibiting modest growth

Systems giant Hewlett-Packard, which is due to separate PC hardware and printers from the rest of the business in November, has filed yet-another quarterly decline in revenue - its fourth in a row, and its last before the split.

Revenues for the third quarter weighed in at $25.3 billion, down eight per cent on the $27.6 billion it filed in the same quarter in 2014. In addition, margins were squeezed, profits were down, and even cash flow from operations - a key indicator of financial health - was also slashed, down by 54 per cent from $3.6 billion to $1.7 billion.

CEO Meg Whitman, however, was upbeat ahead of the company's split in two. "HP delivered results in the third quarter that reflect very strong performance in our Enterprise Group and substantial progress in turning around Enterprise Services. I am very pleased that we have continued to deliver the results we said we would, while remaining on track to execute one of the largest and most complex separations ever undertaken."

Drilling down, the outlook does not appear rosy for the demerged personal systems and printing business. Personal systems revenue, which includes laptops and PCs, fell by 13 per cent, with commercial revenues down by nine per cent, but consumer revenue falling by 22 per cent. In terms of unit shipments, desktop PCs fell by 20 per cent, but laptops by a more modest three per cent.

However, that quarter came in advance of the release of Windows 10, on July 29, which may have muted demand for PCs.

The enterprise group, which encompasses servers and other enterprise hardware, was the only one to register a (modest) increase in revenues of two per cent, with services (based around the ill-fated EDS acquisition) down by 11 per cent, and software by six per cent.

Anthony Miller, managing partner with TechMarketView, described it as "another difficult quarter for HP". The printer business, notes Miller, was hit by aggressive price competition from Japanese vendors (and, presumably, Samsung as well), while the only parts of HP that actually grew, Miller notes, were standard servers (up eight per cent to £3.3 billion) and networking (up 22 per cent to $823 million).

"There was some encouraging news on the services front, with enterprise services' operating margins expanding nearly two points to six per cent. Whitman restated her aim to reach ‘sustainable seven per cent to nine per cent operating margins', although this will require more restructuring and offshore alignment.

"She didn't say how HP's Bangalore-based offshore services captive Mphasis might play a part in this, especially given its growing focus on direct sales."