Boston, MA 03/04/2014 (wallstreetpr) – There are many companies that get left behind in the march of time, Hewlett-Packard Company (NYSE:HPQ) may also face the same future if the company does not diversify. With the printing industry down in the dumps, HPQ will need to foray into diverse fields to recover.
The Printing Industry:
Gone are the days when print outs of each and every document were taken and filed in bulky files. The golden age of communications and cloud storage have meant that digital images are stored and preferred over printed copies. These changes have affected Hewlett-Packard Company (NYSE:HPQ) very badly. The company is trying to adapt to these changes very aggressively. In fact, it reported better than expected results for 2013. Revenues of $28.15 billion beat the expectations of analysts. Diluted earnings of $0.90 per share were also higher than guidance. However, services segment reported a decline in revenues by 7% to $5.95 billion. The software division also reported a fall in revenues of 4%. Only personal systems and enterprise group recorded revenue growths of 4% and 1% respectively.
Headwinds Remain:
The personal systems division represents 30% of the revenues and 11% of profits for the quarter. However, the crown lies on the head of the printing division. It accounts for 21% of the revenues but 41% of the profits. In short, it is bailing out other divisions in the company. The CEO is working to restructure the company and control costs. However there are some costs that need to be increased. The R&D costs, for example, lag behind other peer companies and need an upward revision. The company business model consists of selling printers at a loss so that the company will make profits through the inks sold. This also needs to be looked into as the plan may succeed in Europe and America but fail as it approaches Asia and Africa.
Hewlett-Packard Company (NYSE:HPQ) needs to diversify quickly otherwise it will also fade along with time.
