How Did Hewlett-Packard Perform in Fiscal 2Q17? PART 3 OF 7
PC market share
As we saw in the previous part of this series, Hewlett-Packard (HPQ) regained the top spot in the PC segment from Lenovo at the end of 1Q17. According to IDC, worldwide PC shipments rose 0.6% YoY (year-over-year) to 60.3 million units in fiscal 1Q17. In comparison, HP’s shipments rose 13.1% YoY to 13.1 million units in 1Q17.
HP has the largest market share at 21.8%. In comparison, Lenovo (LNVGY), Dell, Apple (AAPL), and Acer have market shares of 20.4%, 15.9%, 7%, and 6.8%, respectively. Market leaders continue to improve their shares in the PC segment. The top three manufacturers accounted for 58.1% of the worldwide market in 1Q17 as compared to 54.6% in 1Q16. Recently, China’s (FXI) heavyweight Huawei announced that it’s entering the PC segment and will launch three products in June 2017.
HP faces difficult pricing environment
Although HP’s personal system sales rose significantly in fiscal 2Q17, the firm is experiencing a difficult pricing environment. There have been shortages in memory chips and hard drives, which have driven PC manufacturing costs upwards. HP’s chief financial officer, Cathie Lesjak, said that to offset higher costs, the firm has increased PC prices.
While HP continues to improve PC sales YoY, its profit margins seem to be contracting. While revenue rose 7% YoY, GAAP (generally accepted accounting principles) EPS (earnings per share) fell 13% YoY to $0.33 in fiscal 2Q17.
Whether higher PC prices will result in a decline in bulk orders and retail orders remains to be seen. HP CEO Dion Weisler said the current PC market isn’t growing. To increase revenue, Weisler said the company is aiming to “sell more PC accessories and related devices.”