HP continues to struggle competing with Cisco, Lenovo and others?

Enterprise and personal IT vendor HP did not announce encouraging financial reports. Hewlett-Packard chief Meg Whitman is betting on convertible laptop-tablet hybrids during the holiday season and trying to compete with Lenovo, Asus and Sony.

Yesterday, Canalys said Microsoft’s tablet market share will increase to 4 percent in 2014 from 2 percent in 2012. Software vendor Microsoft will become stronger and a full-fledged smartphone supplier after the acquisition of Nokia phone business in a $7.2 billion deal.

HP’s gloomy financial result does not reflect its large product range. HP on Tuesday said its Q4 FY 2013 revenue dipped 3 percent to $29.1 billion, while net income was $1.4 billion against a net loss of $6.9 billion in the year-ago quarter.

In FY 2013, HP posted net income of $5.1 billion ($12.7 billion net loss) on $112.3 billion annual revenue that declined 7 percent.

Revenue fell across most of HP’s business divisions except the enterprise group, whose sales edged up to $7.6 billion. Sales from HP’s largest, PC-focused unit slipped 2 percent to $8.58 billion while the printing division’s sales dipped 1 percent to $6.04 billion.

Interestingly, HP did not say that the U.S. spying initiatives would impact its sales from China. Cisco is concerned about its China revenue.

Reuters reported that the company’s performance in China is in stark contrast to the warning of weakness in the region from rival Cisco and sales declines for IBM.

Though HP CEO Meg Whitman said some of HP’s other businesses didn’t perform as well there as networking and noted the Chinese economy remained uncertain, she added that HP’s renewed focus on the region will help mitigate some of the softness there.

Meg Whitman, chief executive officer and president of Hewlett-Packard, speaks during the grand opening of the company's Executive Briefing Center in Palo Alto
HP recently appointed telecommunications veteran Robert Mao as chairman for its China region.

HP CEO said in an analyst conference call that convertible laptop-tablet hybrids are a key category for HP growth plans during the holidays. But she said it remains to be seen how well the company will do with its entries in this competitive but innovative area of the PC business.

HP is keen to become aggressive like Samsung and Apple and recover from its Q4 debacle. During the fourth quarter fiscal 2013, HP personal systems revenue declined 2 percent year over year to $8.57 billion. Commercial revenue increased 4 percent and consumer revenue declined 10 percent. Total units were up 2 percent with desktops units down 5 percent and notebooks units up 3 percent.

“Our Q4 results demonstrate that HP’s turnaround remains on track heading into fiscal 2014. While we still have much more work to do, our business units and their core assets are delivering on HP’s strategy to help customers thrive by providing solutions for the New Style of IT,” said Meg Whitman on Tuesday.

HP printing revenue dipped 1 percent to $6.04 billion. Total hardware units were up 6 percent with commercial hardware units up 9 percent and consumer hardware units up 4 percent. Supplies revenue was down 4 percent.

The company says HP enterprise group revenue rose 2 percent to $7.59 billion. Networking revenue was up 3 percent, Industry Standard Servers revenue was up 10 percent, Business Critical Systems revenue was down 17 percent, Storage revenue was up 1 percent and Technology Services revenue was down 6 percent.

This is a good sign that HP is catching up with Cisco, Juniper Networks, etc. HP did not share specific revenue details about its first quarter. Cisco said it will face challenging market conditions in China and other markets during the first quarter. HP’s first quarter will depend on holiday sales.

Enterprise services revenue declined 9 percent year over year with a 4.4 percent operating margin. Application and Business Services revenue was down 10 percent, and Infrastructure Technology Outsourcing revenue declined 9 percent.

Software revenue was down 9 percent year over year to $5.75 billion with a 30.8 percent operating margin. Support revenue was up 4 percent, license revenue was down 24 percent, professional services revenue was down 13 percent and software-as-a-service (SaaS) revenue was up 15 percent.

pix: Reuters

[email protected]