Large Format Review - Business News

HP today announced financial results for its second fiscal quarter ended April 30, 2011. Net revenue of $31.6 billion was up 3% from the prior-year period as reported and up 1% when adjusted for the effects of currency.

GAAP diluted earnings per share (EPS) was $1.05, up 15% from $0.91 in the prior-year period. Non-GAAP diluted EPS was $1.24, up 14% from $1.09 in the prior-year period. Non-GAAP financial information excludes after-tax costs of approximately $0.19 per share and $0.18 per share in the second quarter of fiscal 2011 and 2010, respectively, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges. Information about HP's use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.

"HP executed well and delivered a solid quarter," said Léo Apotheker, HP president and chief executive officer. "Our enterprise strategy, with services at its core, is focused on higher value-added solutions. Today we are accelerating our efforts to align our services business model to our long-term strategy to deliver unprecedented value to our customers and a better return for our shareholders."

"In the second quarter, we saw continued strength in the enterprise with combined revenue from our commercial businesses up 8% year over year," said Cathie Lesjak, HP executive vice president and chief financial officer. "We again expanded our margins and increased both earnings per share and cash flow from operations double digits year over year."

Trends and regional performance

Results were largely driven by performance in the commercial sector as businesses continued to spend on technology. HP experienced uneven consumer performance across its product categories during the quarter with continued softness in consumer PCs across all geographies.

Second quarter revenue was up 2% year over year in the Americas to $13.8 billion. Revenue was down 1% in Europe, the Middle East and Africa and up 10% in Asia Pacific to $11.7 billion and $6.1 billion, respectively. When adjusted for the effects of currency, revenue was up 1% in the Americas, flat in Europe, the Middle East and Africa and up 4% in Asia Pacific. Revenue from outside of the United States in the second quarter accounted for 66% of total HP revenue. HP saw accelerated growth in BRIC countries (Brazil, Russia, India and China) with revenue increasing 19% while accounting for 12% of total HP revenue.

Business group highlights

Personal Systems Group (PSG) revenue declined 5% year over year with a 5.7% operating margin. PSG remains the PC market leader in terms of units, revenue and profit share. PSG maintained its market leadership position in Commercial PCs, with Commercial Client revenue growth of 13% outpacing Consumer Client revenue decline of 23% in the quarter.

Imaging and Printing Group (IPG) revenue grew 5% year over year with a 17.0% operating margin. IPG continued to deliver strong performance across the business with share gains in all printing categories and 41% year-over-year growth in commercial printer hardware units. IPG continued to drive innovation and momentum with the new ePrint platform, graphic arts and other commercial print solutions.

Services revenue grew 2% year over year with a 15.2% operating margin. To improve long-term performance, HP is accelerating alignment of the services business with the company's overall strategy, including making investments to drive more value-added solutions and migration to the cloud.

Enterprise Servers, Storage and Networking (ESSN)revenue grew 15% year over year with a 13.8% operating margin. ESSN delivered a solid quarter with HP's innovative converged infrastructure products winning in the data center. HP gained momentum in cloud with strong interest in and the successful launch of HP CloudSystem.

HP Software revenue grew 17% year over year with a 20.2% operating margin. HP Software revenue was driven by strong growth in licenses and services of 29% and 22%, respectively.

HP Financial Services revenue grew 17% year over year with a 9.4% operating margin. Financial Services continued to see its strong performance driven by both double-digit growth in lease volume and a healthy improvement in portfolio assets.

Asset management

HP generated $4.0 billion in cash flow from operations in the second quarter. Inventory ended the quarter at $6.8 billion, with days of inventory up 1 day year over year at 26 days. Accounts receivable of $18.6 billion was up 10 days year over year at 53 days. Accounts payable ended the quarter at $14.2 billion, up 3 days from the prior-year period. HP's dividend payment in the second quarter resulted in cash usage of $182 million. HP also utilized $2.7 billion of cash during the quarter to repurchase approximately 64 million shares of common stock in the open market. HP exited the quarter with $12.8 billion in gross cash.

Outlook

HP's revised outlook for the third quarter and the full year fiscal 2011 reflects an expected near-term impact from the Japan earthquake and related events, continued softness in sales of consumer PCs, and reduced operating profit expectations for Services.

For the third quarter of fiscal 2011, HP estimates revenue of approximately $31.1 billion to $31.3 billion, GAAP diluted EPS of approximately $0.90, and non-GAAP diluted EPS of approximately $1.08.

Third quarter fiscal 2011 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.18 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges.

HP expects full year fiscal 2011 revenue in the range of $129 billion to $130 billion, GAAP diluted EPS of at least $4.27, and non-GAAP diluted EPS of at least $5.00.

Full year fiscal 2011 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.73 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges.

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.

HP's Q2 FY11 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2011q2webcast.

 

Cutting plotter and wide-format inkjet printer manufacturer Mutoh Belgium received two EDP awards, attributed by the European Digital Press association (EDP).  The award “Best Alternative Ink Technology of the year 2011” goes to Mutoh’s Zephyr 3D UV ink.  Mutoh’s Viper TX Soft Sign printer series gets an award in the category “Best Wide Format Textile Printer of the year 2011”.  The awards will be presented at a ceremony during the Fespa Digital show in Hamburg on May 26th.  The award-winning products will be displayed at Fespa Digital 2011 at Mutoh’s booth (Hall A3 – E11).

The EDP awards are attributed by a committee of consultants, editors, engineers and printer industry professionals appointed by the European Digital Press Association (EDP – www.edpassociation.com).  The technical committee selected the Mutoh Zephyr 3D UV ink for “its 200 % elongation capabilities, making it ideal for applications such as car wrapping.  Until now, you couldn’t use ink for car wrapping unless you used a very slow solution.  Mutoh’s Zephyr 3D UV ink produces 20 m²/h and is also eco friendly in terms of power consumption and is immediately dry”.  Comments from the technical committee for their selection of the Mutoh Viper TX Soft Sign printer series were “It is not the first printer with a built-in heat fixating system.  The Mutoh solution differs from other textile printers with a built-in calender by the way it combines good print quality with high speeds for an affordable price”.

The EDP Association is made up of the publishers of leading European magazines devoted to digital printing and associated products.  These publications cover more than 18 European countries with a readership exceeding 1.000.000 professionals.  The Association grants the EDP Awards to the best products of the year introduced in the European market to acknowledge the value of the research and development tasks of the industry.  Evaluation is based on innovation and the value of the new technical abilities a product offers.  This can be innovation in the technology that improves speed, quality, usability or reduces environmental impact as well as cost to the user. The EDP award logos help the digital printer users in identifying the best products in the industry.

Mutoh Zephyr 3D UV inks
 
Immediately dry and ready for lamination & application, the new stretchable 3D UV ink offers 200 % elongation capabilities.

This new zero VOC and non HAP 3D UV inks is suited for 3D wrapping applications on curved, riveted or corrugated surfaces.  Printing on rigid substrates is also possible.

This new ink set from Mutoh is ideally suited for existing solvent printer users or industrial users with focus on 3D wrapping, looking for a productive machine offering best print quality, rigid media compatibility and last but not least offering the flexibility to immediately laminate and apply prints.

Viper TX Soft Sign Printer Series
 
Mutoh’s Viper TX Soft Sign series (1610 mm - 63.38” & 2210 mm – 87”) printers come as a total solution for direct printing of polyester fabrics with open or closed structure.

The engines have been tuned to Mutoh’s VOC free water based direct disperse inks to deliver top print quality.  Prints are immediately dried and heat fixed by the integrated fabric drying and fixation system, making them immediately useable.

Producing durable images with exceptional image quality and brilliant colours at typical production speeds up to 37 m²/h, Mutoh Viper TX Soft Sign printers are suited for a wide variety of applications.

Polytype, the Swiss digital printing technology manufacturer, has announced the appointment of Arrow Systems as the authorised distributor of its Virtu wide-format machines in India and Australasia with immediate effect.
 
With customers in both territories demanding high levels of quality and support from their machines, Polytype identified and quantified the need for a reseller with extensive demonstration and service capabilities. Arrow's holistic approach to satisfying these market requirements, plus its chain of sales and support offices, were key to its selection as a distributing partner of the Virtu range, as were its 20 years' experience in the wide-format market and its keen understanding of the needs of printing companies.
 
"Arrow is in the business of selling and supporting the best products on the market, and our customers expect nothing less from us," states Sam Arrow, managing director of Arrow. "The Virtu range from Polytype outperforms competitors in the same technology space. The printers all place very sharp dots in the most precise manner, and incorporate practical considerations, such as a cooling system for 24/7 operation. Other manufacturers make claims about the performance of their machines, but Polytype goes one step further and provides proof."
 
Arrow has operated in the printing, packaging and coating industries for more than 40 years and previously supplied VUTEk equipment for over two decades. Its network of offices stretches across many regions including India and Australia, supporting customers with service, parts and consumables. Its demonstration, training, research and development facilities also augment its service as Arrow continues to invest in educating both itself and its customers.
 
"Virtu is the standard that other major players in this industry will have to follow," concludes Arrow. "When customers become aware of the Virtu and test drive it, they don't look elsewhere. We encourage any printer who is tired of experimenting, who wants low running costs and the reliability necessary for high throughput and print quality, and who wants a true partner for the long term to visit our showrooms and see Polytype's Virtu series in action. The Virtu machines are the future for this industry."
 
Sylvia Muhr, European sales director for Polytype's Virtu business unit, says that Arrow's infrastructure would allow the Virtu range to reach more customers who need the hardwearing industrial machinery that Polytype offers. "Because of the extensive engineering of the Virtu range, Polytype has ensured that it is suitable for all types of printing environment where performance and precision are of the essence," she comments. "Arrow has recognised this and embodies many of the same quality values, making it the perfect new distribution partner for these important regions."
 
The Virtu range has been developed by Polytype to meet and exceed the stringent quality requirements demanded by an array of applications, including graphic display production, fully operational glass printing lines and various industrial purposes. The fully hybrid 2.5m Virtu RS25 and 3.5m Virtu RS35 sport a robust table as part of the machine's construction, offering the versatility to print on both flexible materials and rigid substrates of unlimited length in six colours plus white or spot varnishes. The RR50 is Polytype's award-winning roll-to-roll printer which offers impressive productivity and quality for graphic arts production and other jobs.

As the traditional printing world continues to evolve with digital printing solutions, INX Digital International is hedging its education efforts in the process.  Following the successful introduction of a training portal for dealers in the third quarter of 2010, INX Digital recently upgraded its www.smartINX.com web site that is available 24/7.

INX Digital manufactures and distributes inkjet inks and toners for a variety of industrial markets. The training portal provides a sales overview and insight into the products offered by INX Digital to dealers who desire to be registered with the company’s global network.  In the last year, INX Digital has introduced several new product lines of dry and liquid toner, plus a range of customised industrial inkjet inks including textile products and UV curable technologies.  Initially available only in English when it debuted nearly eight months ago, the portal now offers Spanish and Portuguese versions.

“The smartINX.com portal is invaluable as a training tool and an information and reference centre for our dealers and employees,” said Ken Kisner, President of INX Digital International.  “Much time has been invested in creating videos, course materials, and a library as well as other educational content.  This is another value-added resource not only for our dealers but our internal staff as well.  We currently have three courses available, but are continuing to add resources to this project and will expand the portal.  The world of digital is a very exciting place to be and we believe this technology tool will help grow our business and empower the global dealer network and channel program.”

INX Digital employees have participated in mandatory training sessions and are well versed to assist and handle any questions dealers have.  Dealers logging into the portal will find a section on how to get started, followed by a training catalog and objectives and access to the virtual library.  They’ll also find training solutions that will prove effective and get a better understanding on how the company’s digital product technological advancements help with print performance.

Currently, INX Digital is well known for its Graphic Arts products that are used primarily for billboards, banners, vehicle and building wraps and other large format output.  However, future updates to the portal will include more detailed information on items such as the EVOLVE™ Advanced Digital Solutions brand line.  Any dealer interested in registering with the INX Digital global network should contact their local company sales representative.

 

Derbyshire-based Victory Design Ltd has announced its move into reflective conspicuity products and corporate vehicle branding solutions.

On moving into these new niche markets, Justin Hines, Sales Director at Victory Design comments, “Whilst retaining our traditional areas of business, we saw a gap in the market to focus our efforts on reflective vehicle kits and branding.  To that end, we’ve developed four distinctive product offerings.”

These offerings are as follows:

Chapter 8 Reflective kits

The Department for Transport (DTF)’s code of practice for safety at street works and road works requires rear conspicuity markings on all works vehicles – whether new or old.  Victory Design has made it easy to comply with this code of conduct by developing easy-to-apply, ready-made reflective kits using 3M and Nikkalite materials.

ECE104 Reflective Rolls

ECE104 is a regulation that establishes guidelines for the use of retro-reflective safety markings on heavy goods vehicles operating on the roads.  It has already been introduced in a number of European countries.  Victory Design offers two options - complete contour line marking or a partial contour marking. 

Emergency Vehicle Conspicuity kits

These kits are targeted at all types of emergency services including the police, ambulances, fire and rescue, highways agency, rail response, mountain rescue and HM coastguard.  In their potentially dangerous day-to-day operations, these emergency services need to know that their vehicles will be seen by other road users and pedestrians.  Using 3M and Nikkalite materials, Victory Designs is able to supply edge-sealed kits with accompanying application diagrams – making it quick and easy to apply the markings.

Corporate Vehicle Branding solutions

Whether a company has one commercial vehicle or an entire fleet, Victory’s Imaging department is now able to fulfil an organisation’s vehicle branding requirements with a fast turnaround and professional fitting service, if required.  These professional fitters are also able to apply any reflective or conspicuity markings at the same time.

Justin adds, “We’ve also recently launched an online presence so we can provide our customers with an alternative efficient and streamlined method of ordering products and locating information.”

The printing industry was in better shape than envisaged during the first quarter of this year but there are signs that market may be slowing, according to the BPIF's Printing Outlook Survey published this week. The latest industry trading trends survey report covers the first quarter of 2011, ending 31 March. The survey was carried out online during the period during the period 1-15 April 2011, and consists of 102 companies employing 8,752 people with a turnover greater than £1 billion.

The Q1 results show that the UK print trade improved on balance for the fourth consecutive quarter. While just over half of firms (51%) stated that trading conditions were unchanged, 30% signalled improvement compared with 20% that reported deterioration, making this the longest period of growth since 1994. However at +10, the Q1 balance between companies expecting improvement versus those expecting deterioration was the lowest in this positive sequence - with the number experiencing a worsening in trade increasing noticeably this time. This may herald the start of a weakening market; an assumption that fits with the less optimistic forecasts being made for the second quarter of the year. While more than three quarters of printers believe that trade will remain the same in the April to June period, a marginal negative balance of -2 expects a tougher time. This forecast is only the second negative prediction for the quarter over the past 20 years.

More firms reported that they are working to full capacity during this last quarter, although others saw utilisation rates fall. Lead times are starting to shorten, with the number of firms reporting lead times of 7 months or more falling sharply to just 1%, compared with a fifth of all printers at the time of the last survey and 13% during Q3 2010. The majority (57%) now report lead times of up to three weeks, compared with 36% during the final quarter of last year.

The survey shows little overall change in domestic demand, with the order situation signifying something of an overall static market. Approximately half of respondents reported no change in order levels during the first quarter, while the remainder were split between those seeing a rise in demand versus a decrease. Forecasts for Q2 suggest that more printers believe that they will experience a better period themselves than the trade in general, with 30% expecting a rise in demand. This compares with 17% predicting that order levels will dip.

Output levels strengthened during first quarter, despite static demand. Respondents also expect production to be in line with improved order levels during Q2. There was little overall change in industry employment levels in the first quarter, although some job losses are expected in the period ahead.

Nearly a third of respondents had raised domestic prices but similar level had been forced to cut them. The overall 'no-change' scenario, which was better than forecast, was in line with the previous three quarters. The Q2 Outlook is much the same. As expected, inflationary pressures on costs continued, with no let-up expected in Q2. Paper and board remains the biggest cause of concern, with almost three-quarters expecting further price hikes during Q2 2011.

Margins continue to be being squeezed but a fifth of printers still posted improvement nonetheless. Prospects for the next quarter appear poorer though, and profit levels appear to be in retreat with more firms posting losses. More than half of respondents revealed that they were either making a profit of up to 4% or none at all. This compared with a third in this position three months ago. In addition, only 15% (compared with 26% last time) reported profits of 7.5% or more.

Greater investment is earmarked for buildings, while spending on plant and machinery is to lessen. While the majority of printers (92%) continue to invest in the latter, the level of expenditure is on the decrease. Only a third looks set to spend more on new and upgraded units, whereas 45% intend investing to a lesser degree. On the other hand, two-thirds of firms plan investment on the alteration of buildings, up from 52% at the time of the last survey, while 40% have capital expenditure plans for new buildings, an increase from 33% last time.

Respondents reported some easing of the position in relation to access to finance. In the year to March, 25% of respondents experienced an improvement in the availability of bank lending facilities and 26% a reduction in the cost of bank lending.  Whilst the percentage of respondents reporting an improvement in the availability of bank lending was almost entirely offset by those reporting an increase in its cost, a significant positive balance remained for the availability of bank lending  - with only 13% reporting a decline.

BPIF Public Affairs adviser Andrew Brown says, "The BPIF's Q1 Printing Outlook Survey results suggest that the printing industry has got off to a reasonably good start to the year, with a run of improvements in trade that has now lasted for four successive quarters. However there are signs that the market is weakening, with a slight majority of respondents forecasting that trade will remain the same or get tougher in the second quarter of this year. There is also a great deal of anxiety over rising costs and weakening profit levels, and the inability of many printers to raise output prices is a major concern as they continue to absorb further rises in input costs."