Demand for HP printer supplies in free-fall – and Intel CPU shortages aren't helping either

Lmao, don't worry – if you were – cuz toners still a licence to print spondulix

Forget Intel's chip drought: an unforeseen collapse in demand for print supplies in EMEA is the bigger issue keeping HP Inc's management on their toes.

The US biz last night outlined financials for its fiscal 2019 Q1, aka the three months to 31 January: group revenue was up just 1 per cent to $14.71bn, a marked downturn on the double-digit rises HP reported in each of the prior year quarters.

The Personal Systems side of the house was up 2 per cent to $9.657bn – again a more muted growth figure. Notebooks sales climbed 6 per cent to $5.919bn; desktops were down 3 per cent to $2.857bn; workstations edged up 3 per cent to $562m; and the Others category was down 8 per cent to $319m.

CEO Dion Weisler reminded analysts on an earnings call of his warning in the previous quarter about the impact of the industry-wide Intel CPU shortages.

"As expected, the first half [year] headwinds we previously shared with you are playing out. But we are navigating them well," he said. "We are improving product mix and managing our cost."

Earnings before tax in Personal Systems bounced to $410m from $335m a year ago.


Gartner: Not a very merry Christmas for PC market as chip shortage bites, small biz vanishes


Intel supply challenges began in 2018 when Chipzilla was caught out by a surge in Windows 10 PC refreshes in the corporate sector, rising demand from cloud providers and the failure to produce silicon with a 10nm process.

The imbalance is forecast to run until the halfway stage of calendar '19, Chipzilla's now permanent CEO said in January.

The chip worries no doubt dented HP's results – Microsoft also blamed Intel's woes for a dip in Windows and Office revenues – but it was the printer division that really hit home as sales fell to $5.056bn from $5.076bn.

Printing supplies were down 3 per cent to $3.267bn, commercial hardware for printing was up 5 per cent to $1.09bn, and consumer hardware for the segment was up 2 per cent to $699m.

Weisler described print supplies as an "unexpected challenge". He said: "Supplies revenue was weaker than expected, particularly in EMEA [where] supplies declined 9 per cent."

In essence, there was a slowdown in sell-through from the biggest resellers in the region, and this led to a build-up of inventory that HP Inc CFO Steve Fieler told analysts on the call would be reduced in the year.

"We expect to lower the inventory in the entire ecosystem enabled by reducing our Tier-1 channel inventory. The impact of this action will create approximately $100m headwind to supplies revenue for the remainder of [this fiscal year]," he said.

By correcting inventory, the CFO expected less pressure on pricing.

Under pressure

Weisler, meanwhile, said more customers were buying supplies online and although HP Inc has a leading share in this channel, it is still relatively lower than traditional routes to market.

"In addition, as macro uncertainty has increased, we have seen further price sensitivity among customers pressuring both our share and our supplies pricing."

Customers are printing less, too, in this digital and environmentally conscious age, though the printer-less office now seems a fantasy. HP has made some ground in the print services sector, which is how many large corporations consume the tech.

Despite the sales wobble in the print division, HP reported earnings before tax of $821m versus $799m in the prior year quarter. So it seems the company still has a licence to print money [sorry, everyone – Ed].

Total earnings before tax following a series of charges and expenses was $900m, compared to $905m the year before. Net profit was $803m, down from $1.938bn in last year's Q1, when the inky HP had a boost from a tax windfall. ®

Similar topics

Other stories you might like

  • North Korea pulled in $400m in cryptocurrency heists last year – report

    Plus: FIFA 22 players lose their identity and Texas gets phony QR codes

    In brief Thieves operating for the North Korean government made off with almost $400m in digicash last year in a concerted attack to steal and launder as much currency as they could.

    A report from blockchain biz Chainalysis found that attackers were going after investment houses and currency exchanges in a bid to purloin funds and send them back to the Glorious Leader's coffers. They then use mixing software to make masses of micropayments to new wallets, before consolidating them all again into a new account and moving the funds.

    Bitcoin used to be a top target but Ether is now the most stolen currency, say the researchers, accounting for 58 per cent of the funds filched. Bitcoin accounted for just 20 per cent, a fall of more than 50 per cent since 2019 - although part of the reason might be that they are now so valuable people are taking more care with them.

    Continue reading
  • Tesla Full Self-Driving videos prompt California's DMV to rethink policy on accidents

    Plus: AI systems can identify different chess players by their moves and more

    In brief California’s Department of Motor Vehicles said it’s “revisiting” its opinion of whether Tesla’s so-called Full Self-Driving feature needs more oversight after a series of videos demonstrate how the technology can be dangerous.

    “Recent software updates, videos showing dangerous use of that technology, open investigations by the National Highway Traffic Safety Administration, and the opinions of other experts in this space,” have made the DMV think twice about Tesla, according to a letter sent to California’s Senator Lena Gonzalez (D-Long Beach), chair of the Senate’s transportation committee, and first reported by the LA Times.

    Tesla isn’t required to report the number of crashes to California’s DMV unlike other self-driving car companies like Waymo or Cruise because it operates at lower levels of autonomy and requires human supervision. But that may change after videos like drivers having to take over to avoid accidentally swerving into pedestrians crossing the road or failing to detect a truck in the middle of the road continue circulating.

    Continue reading
  • Alien life on Super-Earth can survive longer than us due to long-lasting protection from cosmic rays

    Laser experiments show their magnetic fields shielding their surfaces from radiation last longer

    Life on Super-Earths may have more time to develop and evolve, thanks to their long-lasting magnetic fields protecting them against harmful cosmic rays, according to new research published in Science.

    Space is a hazardous environment. Streams of charged particles traveling at very close to the speed of light, ejected from stars and distant galaxies, bombard planets. The intense radiation can strip atmospheres and cause oceans on planetary surfaces to dry up over time, leaving them arid and incapable of supporting habitable life. Cosmic rays, however, are deflected away from Earth, however, since it’s shielded by its magnetic field.

    Now, a team of researchers led by the Lawrence Livermore National Laboratory (LLNL) believe that Super-Earths - planets that are more massive than Earth but less than Neptune - may have magnetic fields too. Their defensive bubbles, in fact, are estimated to stay intact for longer than the one around Earth, meaning life on their surfaces will have more time to develop and survive.

    Continue reading

Biting the hand that feeds IT © 1998–2022