HP, Dell Took a Hit in Core PC Business: A Disappointing Q1

Rivals Hewlett-Packard and Dell have more than one thing in common. They’re competing in the same markets, from PCs to servers, and they’ve both seen an impact on their businesses from mobile devices. More recently however, Dell and now HP reported weak earnings that failed to meet what Wall Street had in mind.

The company reported a profit of $1.5 billion, 44 percent less than what it reported in the first quarter of the previous fiscal year, on sales of $30 billion – about seven percent less than last year. Bloomberg’s breakdown reveals that it was mainly the hardware maker’s core businesses that took a hit. Its PC unit, valuated higher than $40 billion, has seen sales drop by 15 percent to $8.87 billion, and sales of consumer machines has decreased by a whopping 25 percent year-over-year.

We’ve discussed how most of the revenue Dell generates also comes from this market, which is why this industry-wide decline was one of the main reasons behind its poor results for its latest fiscal quarter. HP is more spread-out between different areas in the consumer space and enterprise, but has slid in several of those as well.

Its servers, storage and networking group dropped 10 percent to just over $5 billion, while in comparison software sales surged by a very noticeable 30 percent. It’s now up to CEO Meg Whiteman to improve her company’s current state, although it’s generally agreed that will likely be a rather lengthy process.

Whitman said she’s attacking inefficient product-design and sales processes and investing in research and development to try to make the company more competitive…she’s paring the number of PCs and printers Hewlett-Packard sells and making it easier for salespeople to adjust price quotes to book an order. She’s also been holding roundtables in Houston and other cities with chief information officers of big customers to suss out their needs.