HP NZ reports $16 million loss, despite improving sales
HP New Zealand has reported a widening loss of $16 million for the year ended October 31, 2014, despite improving sales revenue.
The company saw sales revenue increase 6.6% to $592.3 million, up from $555.5 million in 2013.
Other revenue was up nearly 100% from $14.6 million in 2013 to $29.1 million in 2014.
The increases weren’t enough, however, to spare HP from another massive financial hit, with cost of sales of $432 million and administration expenses wiping another $190 million. ‘Termination’ benefits accounted for $5 million of the admin expenses.
The company received a $176,000 income tax benefit. A year ago it had an income tax expense of $2.4 million.
The 2014 results are, however, a dramatic improvement on 2012’s loss of $92.5 million.
The company doesn’t comment on local results.
The company appears to have failed to fully capitalise on its 2008 acquisition of EDS, which was a dominant player in the corporate and government data centre arena. While competitors including Datacom, IBM and Revera – owned by Spark – have invested heavily in data centres locally, HP hasn’t.
The vendor isn’t included on the all of government infrastructure-as-a-service panel – with Datacom, IBM and Revera winning there instead. Most of the data centres are likely to include HP servers.
HP’s local loss comes in a year which saw ‘astonishing’ year-on-year growth for PC sales in New Zealand.
Just last month, IDC told ChannelLife that HP had grown its market share and done ‘really well’ in 2014. The company closed out the year with 19.8% growth in Q4, taking 43% of the market share.
Oliver Hill, HP New Zealand channel sales organisation manager also noted last month that the company had a record market share in the New Zealand PC market in calendar Q4 2014.
The local losses come against a backdrop of HP’s international split into two companies, due to come into force on November 01.
The separation, which is expected to cost around US$2 billion will see the company cleave into two separate technology companies. Hewlett-Packard Enterprise will handle technology infrastructure, software, services and cloud solutions, while HP Inc will handle personal systems and printing.
Globally, HP reported net revenue of US$111.5 billion, down 1% year-on-year, with cash flow from operations of US$12.3 billion.
The company is in the third year of a five year ‘turnaround’ effort.
Meg Whitman, HP chairman, president and CEO has previously said fiscal 2015 will be a defining year for HP.
“Our challenge – and our opportunity – is to take our performance to the next level, while executing the separation,” Whitman said in announcing the global fiscal 2014 results.
“We are determined not to skip a beat in fiscal 2015.”