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HP hardware sales slump but software side offers firm glimmer of hope

23 Aug 2012
An HP logo

Another quarter, and here comes another poor financial performance from HP after it posted losses of $9bn, although it can at apparently blame part of this on a write-down for its acquisition of Electronic Data Systems (EDS) back in 2008.

However, behind this attention-grabbing figure, there were even more worrying signs for HP, with numerous areas of its business groups haemorrhaging cash as sales slumped.

Revenue was down 10 percent within the Personal Systems Group (PSG), for example, with both business and consumer sales slumping. Desktops declined six percent, notebooks 12 percent and total units were down 10 percent.

It's been well known that hardware sales are declining, particularly in the face of intense competition from tablets such as Apple's iPad, and the figures underline the scale of the slump. Perhaps Leo Apotheker was on to something after all.

However, it's not as if the other areas of the hardware business are holding up. The Enterprise, Servers, Storage and Networking (ESSN) division saw revenues down four percent, with each area of the unit, bar one, losing market share.

Only networking revenues were up – by six percent – which Forrester analyst Frank Gillett said was due to increased focus from HP on this area.

"HP has been aggressively investing in competing against Cisco but other areas are down because of economic stagnation and stronger competition," he explained to V3.

Principal software analyst at Ovum, Roy Illsley, told V3 that another reason for this increase could be that firms are starting to splash out on networking equipment that is IPv6 compatible as this issue rises on the IT agenda.

Elsewhere, printing revenues were down by three percent, and service revenues were down by the same amount, while IT Outsourcing services were, yes you guessed it, down, although this time by six percent.

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Dan Worth

Dan Worth is the news editor for V3 having first joined the site as a reporter in November 2009. He specialises in a raft of areas including fixed and mobile telecoms, data protection, social media and government IT. Before joining V3 Dan covered communications technology, data handling and resilience in the emergency services sector on the BAPCO Journal

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