HP Nosedive

Hewlett Packard's 09Q2 numbers tell a very mixed story, and the supporting slide deck tells this story the best through its tables and charts. Overall sales are down by just over 3% compared with the same quarter one year ago [although at constant currency they were up by almost 3%]. But, PSG's [the Personal Systems Group] sales were down 19%, while IPG's [the Imaging and Printing Group] sales were down 23%.

PSG's desktop revenues fell by 24%, with notebook revenues falling by 13% year-on-year. But when measured by units, desktop sales were down 13%, while notebook sales were up by 14%.

IPG's hardware units were down 27% year-on-year, with consumer segment [principally ink jet printers] sales down by 23%, and the commercial segment [principally laser printers] sales down by a whopping 36%. Supplies revenues - for many years, the major contributor to HP's profits - were down 14%.

Overall, HP's figures are a better indication of the current state of the market than Intel's recent pronouncement that we've reached the bottom of the market. HP is principally a channel-centric company, using a two-tier distribution model in EMEA. That may mean that these numbers have, in some ways, been distorted by de-stocking activity at their wholesalers and also at the resellers and retailers. But that, should only be a one-time activity, and we saw evidence of de-stocking last quarter. So we must presume that HP's figures represent the reality of the marketplace, and that it is the on-going twin perils of price deflation and shrinking demand.