Large Format Review - Business News

    - Net revenue of $27.5 billion, down 2% from the prior year and up 4% in constant currency

    - GAAP operating profit down 14% to $2.2 billion; GAAP earnings per share $0.67, down from $0.80 a year earlier

    - Non-GAAP operating profit up 8% to $3.0 billion; non-GAAP earnings per share $0.91, up from $0.86 a year earlier

    - Cash flow from operations of $3.9 billion, up 15% from the prior year

    - Record Services profit of $1.3 billion

HP today announced financial results for its third fiscal quarter ended July 31, 2009, with net revenue of $27.5 billion, down 2% from a year earlier and up 4% when adjusted for the effects of currency.

In the third quarter, GAAP operating profit was $2.2 billion and GAAP diluted earnings per share (EPS) was $0.67, down from $0.80 in the prior-year period. Non-GAAP operating profit was $3.0 billion, with non-GAAP diluted EPS of $0.91, up from $0.86 in the prior-year period. Non-GAAP financial information excludes $568 million of adjustments on an after-tax basis, or $0.24 per diluted share, related primarily to amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

“HP’s performance this quarter is a result of our strong business portfolio, efficient cost structure and scale. We made positive gains in extending our market leadership in key segments and strengthening our competitive position,” said Mark Hurd, HP chairman and chief executive officer. “Business is stabilizing, and we are confident that HP will be an early beneficiary of an economic turnaround and will continue to outperform when conditions improve.”
                                               
Information about HP’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below. Unless otherwise noted, all growth rates reflect year-over-year comparisons.

“Record profit in Services, double-digit revenue growth in China, and solid cash flow demonstrate HP’s ability to execute,” said Cathie Lesjak, HP executive vice president and chief financial officer. “We are investing for the future and executing operational efficiencies with the goal of driving long-term, profitable growth.”

Revenue grew 8% in the Americas to $12.6 billion. Revenue declined 12% in Europe, the Middle East and Africa and 4% in Asia Pacific to $9.9 billion and $5.0 billion, respectively. When adjusted for the effects of currency, revenue grew 11% in the Americas while declining 2% in Europe, the Middle East and Africa while Asia Pacific was flat. Revenue from outside of the United States in the third quarter accounted for 62% of total revenue, with revenue in the BRIC countries (Brazil, Russia, India and China) declining 6% over the prior-year period while accounting for 10% of total HP revenue.

Services
Services revenue increased 93% to $8.5 billion due primarily to the EDS acquisition. Infrastructure Technology Outsourcing posted revenue of $3.9 billion while Technology Services, Application Services and Business Process Outsourcing posted revenue of $2.4 billion, $1.4 billion and $711 million, respectively. Operating profit was $1.3 billion, or 15.2% of revenue, up from $567 million, or 12.9% of revenue, in the prior-year period. The EDS integration is tracking ahead of plan.

Enterprise Storage and Servers

Enterprise Storage and Servers (ESS) reported total revenue of $3.7 billion, down 23%. Storage revenue declined 21%, with the midrange EVA product line down 23%. Industry Standard Server revenue declined 21% and Business Critical Systems revenue declined 30%, while ESS blade revenue was down 14%. Operating profit was $356 million, or 9.7% of revenue, down from $544 million, or 11.5% of revenue, in the prior-year period.

HP Software

HP Software revenue declined 22% to $847 million. Business Technology Optimization declined 22%, and Other Software revenue declined 23%. Operating profit was $153 million, or 18.1% of revenue, up from $135 million, or 12.4% of revenue, in the prior-year period.

Personal Systems Group

Personal Systems Group (PSG) posted an increase of unit shipments of 2% and maintained the leading market position in PCs worldwide. PSG revenue declined 18% to $8.4 billion. Notebook revenue for the quarter was down 10%, while Desktop revenue declined 26%. Commercial client revenue was down 22%, while Consumer client revenue decreased 13%. Operating profit was $386 million, or 4.6% of revenue, down from $587 million, or 5.7% of revenue, in the prior-year period.

Imaging and Printing Group

Imaging and Printing Group (IPG) revenue declined 20% to $5.7 billion. Supplies revenue was down 13% due in part to continued channel inventory realignment, while Commercial hardware revenue and Consumer hardware revenue declined 37% and 21%, respectively. Printer unit shipments decreased 23%, with Commercial printer hardware units down 42% and Consumer printer hardware units down 16%. Operating profit was $960 million, or 17.0% of revenue, versus $1.0 billion, or 14.8% of revenue, in the prior-year period.

HP Financial Services

HP Financial Services (HPFS) reported revenue of $670 million, down 1% from the prior-year period. Financing volume increased 12%, and net portfolio assets increased 6%. Operating margin was 7.9% of revenue, up from 7.5% in the prior-year period.

Asset management

HP generated $3.9 billion in cash flow from operations for the third quarter. Inventory ended the quarter at $5.9 billion, down 10 days. Accounts receivable of $14.7 billion was up 4 days. Accounts payable ended the quarter at $12.8 billion, down 7 days. HP’s dividend payment of $0.08 per share in the third quarter resulted in cash usage of $191 million. HP utilized $999 million of cash during the third quarter to repurchase approximately 28 million shares of common stock in the open market. HP exited the quarter with $13.7 billion in gross cash.

Outlook

HP expects fourth quarter FY09 revenue to be up approximately 8% sequentially. Fourth quarter FY09 non-GAAP diluted EPS is expected to be approximately $1.12. Fourth quarter FY09 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.15 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges. On a GAAP basis, fourth quarter FY09 diluted EPS is expected to be approximately $0.97.

For the full year 2009, HP expects revenue and earnings to be in-line with the mid-point of the outlook range provided on May 19, 2009.

More information on HP’s quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at www.hp.com/investor/home

Xerox Corporation announced today second-quarter 2009 results that include earnings per share of 16 cents and $609 million in operating cash flow.

"During the second quarter, we exceeded our expectations for EPS and cash flow, reflecting our disciplined approach to operational improvements across the board," said Ursula M. Burns, Xerox chief executive officer. "Gross margin and cash are up; expenses are down – all key factors to our strong financial position that is serving us well during this tough economy.

"At the same time, our industry continues to face challenges from the decline in enterprise spending on technology. We have seen sequential improvement with revenue up 5 percent from the first quarter. However, assuming current economic conditions persist, we expect revenue will remain under pressure during the balance of this year," she added.

Total revenue of $3.7 billion was down 18 percent from second-quarter 2008 including a 5 point negative impact from currency. Post-sale and financing revenue was down 14 percent, or 8 percent in constant currency. Equipment sale revenue declined 29 percent, or 25 percent in constant currency. The revenue decline is largely due to continued spending constraints in the overall business environment, which is delaying purchasing decisions for new technology and slowing demand for document-related supplies.

"In this cost-conscious environment, our clients are responding to Xerox's managed print services that reduce document costs by up to 30 percent, and to the value we provide through innovation like the Xerox ColorQube solid ink system that cuts the cost of color pages by up to 62 percent," noted Burns. "Xerox's value proposition along with the breadth of our offerings for businesses of any size, expanded distribution, and global account management gives us confidence in the strength of our long-term competitive position."

Second-quarter operating cash flow of $609 million was $167 million higher than prior year driven by working capital improvements. Following this strong performance, the company raised its expectations for full-year operating cash flow to $1.5 billion from $1.3 billion. Xerox ended the second quarter with a cash balance of $1.2 billion, and total debt was down $347 million through the first half of the year. Xerox plans to reduce overall debt by $1 billion this year.

Gross margin was 40.2 percent in the second quarter, an increase of one point from the prior year and up 1.3 points from the first quarter of this year. Second-quarter selling, administrative and general (SAG) expenses were down year over year by $157 million and SAG as a percent of revenue was 27.2 percent.

Xerox expects third-quarter 2009 earnings per share in the range of 10 cents to 12 cents, delivering full-year 2009 earnings per share of 50 cents to 55 cents.

Velmex Distribution, based in Mitcham Surrey, announced today their strategic relationship with EFI to boost their product offerings into the large format channel. EFI’s prepress and production products provide an end to end solution when used with the recently Fogra certified Canon iPF5100 or iPF6100 products.  Velmex, the leading Canon UK large format distributor now have a Fogra certified engineer who can calibrate and install a Colorproof XF system that produces an “EFI-Fogra cert” compliant proof. By passing this certification Velmex are now able to offer a full chain of Fogra compliant products. The importance of this solution means Velmex are now able to distribute the total printing package to the reseller channel, and offer their customers a full EFI – Fogra certification on their printing systems once calibrated.  Daniel Judge, Product Specialist for Velmex distribution said, “It gives us the opportunity to provide a further value added service to our resellers, allowing them to sell our solutions with the knowledge we can provide the qualification to back it up.”

Whilst EFI’s product range is vast the concentration for Velmex is around three products, EFI’s Colorproof –XF, Colorproof – Express and for production environments the EFI Fiery XF. “Our aim was to provide quality products that gave our customers a good range to choose from, whatever their requirement” says Judge, “These products provide the perfect balance to our portfolio, and our EFI Fogra Certification means we can now provide a full end to end solution or any element within that.”    EFI, a company with a pedigree in rip production since 1989, are based in Foster City in the Silicon Valley, they have 23 offices worldwide and are leaders in the digital print industry.  EFI together with Tecco and Fogra set up the “EFI Fogra cert” initiative for compliant proofs to guarantee high quality and reliably printing, it means that resellers, consultants, printing houses and prepress business and their customers can understand what the standardisation means and receive all the benefits from it. As an EFI Fogra certified engineer Judge can go onto a customer’s site and using the approved EFI Colorproof XF and Canon iPF5100 or iPF6100 printer produce a proof card to be submitted to Fogra so the customer can receive Fogra certification on their printing system.  “This opens up sales avenues for our channel” says Judge, “the feedback we’ve had from our resellers is excellent and we have all products and upgrades now in stock and we’re looking forward to a long term relationship with EFI to help take us further into the proofing market.”

FUJIFILM Europe, a leading supplier of total solutions for the Graphic Arts industry, today announces the commercial availability of its high speed thermal plate for newspaper applications, Brillia LH-NN2, first announced at Ifra 2008.

Designed specifically for newspaper production with 830 nm laser diode equipped platesetters, the notable features of Brillia LH-NN2 include: high-sensitivity for extended laser life; wide exposure latitude for stability and repeatability; long developer life for economy and minimal environmental impact, and the benefits of Fujifilm's patented MultiGrain™ technology for reduced ink usage and improved ink/water balance. Suitable for up to 300,000 impressions, the commercial availability of Brillia LH-NN2 means Fujifilm now has one of the widest ranges of plate production solutions on the market.

Specifications:
Sensitivity: 70 mJ/cm²
Resolution: 2-98% dot at 1200dpi/150lpi
Run length: 300,000
Developer / Replenisher: LP-DZ / LP-DRZ

Thanks to an unprecedented investment programme in plate R&D and manufacturing, Fujifilm is now able to offer the most complete, high quality, environmentally-friendly range of CTP plate products in the industry. In line with Fujifilm's long term strategy of offering choice, the Brillia range of CTP plates now comprises both violet and thermal versions, with processed, reduced chemistry and processless derivatives. Underpinned by a world-wide support infrastructure and plate manufacturing capability, Fujifilm has developed a solid platform from which to further its position as the number one plate supplier in the market.

Proskills, the Sector Skills Council for the Process & Manufacturing sector, which includes the print and paper industries, is making a plea to printers to join forces with them to help shape the future direction of skills provision and training for the printing industry. Richard Moore, the recently appointed Print and Paper Industry Lead at Proskills is heading the campaign to encourage as many printers as possible to provide more representative input into how Proskills can assist employers gain the right training provision, offer the most appropriate industry-specific qualifications and guide businesses through the process of obtaining government funding for skills training.

“We need more printers to work with; their input is critical to our success in ensuring our industry has the right skills and training provision going forward,” says Richard Moore, Print and Paper Industry Lead at Proskills. Companies can either continue to voice their disapproval, disappointment and even disillusionment with the current system, or they can get actively involved and work with us at Proskills to develop skills training solutions and qualifications that fit with the needs of our industry.”

There are two ways print companies can get involved; by joining the Print Industry Board, or as a representative on the Standards and Qualifications Reform Group.

The Print Industry Board helps set the strategic direction for Proskills and plays a direct role in influencing skills development and training provision. To date, it has a membership of just over 20 employers, but in real terms, these companies only represent a small fraction of the industry, which comprises around 16,000 workplaces and 145,000 employees. Supported by representatives from employer bodies, trade unions and training providers, the task of the Print Industry Board is to ensure that the objectives and solutions developed by Proskills and the National Skills Academy for Materials, Production & Supply (NSAMPS), the new directional delivery arm of Proskills, remain fully aligned to the needs of the industry.

The role of the Standards and Qualifications Reform Group is to develop and review new and existing standards and qualifications to meet the increasing demands of business, and as such, play a key role in ensuring the right training provision is in place to support investment in skills.

Richard Moore added, “Too often, we hear the criticism that the current government’s skills and funding system doesn’t deliver against the disparate needs of the printing industry – the wrong sort of training provision or delivery solution and the complex funding rules and processes that seem to preclude rather than include, all of which are frequently cited as the reason for not training staff. But is this viable in today’s economic climate, where advanced skills can drive business growth and aid survival during these difficult times?.”

“To ensure a more complete coverage and ever more influential input, we need more printers to get involved with the work we do and join the membership of both our Print and Paper Industry Boards as well as join our Standards and Qualifications Reform Group.”

For more information, or anyone interesting in joining should contact Richard Moore on Richard.moore@proskills.co.uk or call 07910 247734.

 

On the 1st July printMAX successfully completed its acquisition of the consumables business of Planet Media Ltd. This represents a major step forward for printMAX in the consumables arena.

Michael Bolton, MD of printMAX commented, “I am excited to be announcing what is a significant boost to printMAX's capability in terms of products and expertise in consumables. Planet Media has an excellent reputation in the industry and printMAX is very proud to be continuing this commitment to quality and service under the printMAX banner”.

Brian Stringer, MD of Planet Media: “When I was looking at potential candidates to take on our consumables division. I knew I only wanted to offer it to a company of high standards of integrity and service to maintain what we had already built up. With Mike Bolton at the reins of printMAX, they have consistently fulfilled these criteria, and I am very happy to entrust the well-oiled machine that is Planet Media to Mike’s capable hands”.

As part of the acquisition, printMAX will be taking on Nigel Reineck, Planet Media’s Senior Sales Manager. Nigel brings an intimate knowledge of Planet Media and 25 years experience of the consumables business to printMAX, which has been a leader in large format print itself for 20 years. This combined wealth of knowledge and experience will bolster printMAX’s position at the forefront of the large format print, finishing and consumables industry.

This extends printMAX’s capabilities significantly in terms of available portfolio of products, the range of media and inks on offer and the wealth of knowledge, service and backup available for printMAX customers.

"This is a tremendous addition to printMAX, one that will show tangible benefit to our customers. This expansion will consolidate printMAX’s position as an industry leader in products, service, and customer focused know-how”. Michael Bolton, MD, printMAX.

Email: info@printmax.co.uk

Web: www.printmax.co.uk