Morningstar | HP faces sustainable growth headwinds within the challenging PC and printing markets.
Although we expect HP to remain a leader in the personal computer and printing markets, we opine that difficult long-term business environments should temper sustainable growth opportunities. Industry shifts toward using mobile devices as computer supplements or replacements, PC hardware refresh cycles less dependent on operating system launches, and fewer printing tasks being performed for economic and environmental reasons may create headwinds for HP. We believe that HP's growth initiatives will expand its market share within the PC and printing industries as consolidation occurs, but we expect cost competitiveness among the remaining vendors to limit potential upside.We believe personal computer purchases will contract as more households primarily use smartphones for computing tasks and as cloud-based software upgrades delay the impetus to upgrade computer hardware. HP's personal systems business, containing notebooks, desktops, and workstations, yields a narrow operating margin that we do not foresee expanding. The company's growth focus areas of device-as-a-service, or DaaS, and expanding its gaming and premium product offerings should help stem losses from its core expertise of selling basic computer systems. Contractual service offerings like HP's DaaS are alluring to businesses since IT teams can offload hardware management, receive analytics to proactively mitigate computer issues, and pay monthly instead of facing unpredictable large capital expenditures.HP's contractual managed print services, in additional to focusing on graphics, A3, and 3D printers are moves in the correct direction, but the overarching trend of lower printing demand should stymie revenue growth within printing, in our view. The company is innovating in a mature market, but we believe competitors can mimic HP's successes or cause price disruption. HP's scale may enable success within the 3D printing market; even though HP is late entrant, its movement into printing metals could cause customer adoption. Our largest concern with the printing market is the overall trend of screen reading replacing printed pages, and we do not believe HP's initiatives can offset the macro trend.HP is a provider of personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. The company's segments are: Personal Systems, which provides commercial and consumer desktop and notebook personal computers, workstations, thin clients, commercial mobility devices, retail point-of-sale systems, displays and other related accessories, software, support and services; Printing, which provides consumer and commercial printer hardware, supplies, solutions and services, as well as scanning devices; and Corporate Investments, which includes HP Labs and certain business incubation and investment projects.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.