Will New Print Products Turn Hewlett-Packard Around?

In an effort to expand its printing business, Hewlett-Packard Co. (NYSE:HPQ) recently unveiled a host of solutions. These are part of H-P’s new brand, JetAdvantage.

The expanded offerings include cloud-based solutions, which will provide users a secure and flexible network. With computing going mobile and moving to the cloud, the security needs of corporate networks are also changing. H-P’s printing solutions are designed to address these evolving needs.

HP JetAdvantage is a cost-effective bundle that helps users to reduce complexities and data loss thereby enhancing user experience and providing high-quality prints. Moreover, H-P’s mobile print technology enables wireless printing from smartphones, tablets and other mobile devices.

The HP JetAdvantage suite provides three enriched offerings including HP Imaging and Printing Security Center, HP Print Security Advisory Services, and a new series of LaserJet Enterprise flow multifunction printers. The suite can be used as an efficient tool to improve process automation and reduce costs so that businesses can shift their focus to sources of revenue generation.

Due to the rapid adoption of cloud computing technologies, security of the print framework and data protection have become the top priorities for enterprises in recent times. According to H-P, 90% of the companies underwent data losses and are concerned about security loopholes in the overall printing environment. We believe that H-P’s Printing Solutions and Services will help the company to protect the enterprise's overall network security and printing environment.

It is worth noting that revenues from the Printing segment were down 3.8% year over year to $5.59 billion in the last-reported quarter (third-quarter 2014), due to a 5% year-over-year decline in supplies revenues and a 6% decline in consumer hardware revenues. We believe that H-P can revive the business and have a bigger share in the printer market with these new offerings.

Over the last 60 days, 13 out of 15 estimates for H-P were revised upward for fiscal 2014. The Zacks Consensus Estimate for fiscal 2014 increased 0.5% (2 cents) to $3.73.

Hewlett-Packard’s traction in the cloud, security and Big Data segments are positives. The company’s strategic focus on the software business will help it to achieve long-term profitability. Moreover, restructuring initiatives to rationalize costs are expected to improve the company’s profitability in the long run.

Nonetheless, macroeconomic challenges and tepid IT spending remain near-term concerns. Competition from IBM and Oracle should also not be discounted.

Hewlett-Packard has a Zacks Rank #3 (Hold).

Micron Technology (NASDAQ:MU) is a better-ranked stock with a Zacks Rank #1 (Strong Buy).

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