How HP Is Eyeing Growth in Its Printer Segment

HP and the Key Trends and Drivers Impacting It PART 8 OF 10

By Adam Rogers  | Oct 3, 2017 9:43 am EDT

Focus on disruptive technology

HP (HPQ) will complete its acquisition of Samsung’s (SSNLF) printer assets by the end of this year. It aims to penetrate the A3 copier space after the acquisition by bringing disruptive technology. In the A3 segment, HP has focused on cheaper printer technology compared to copier technology, which is more expensive and more difficult to service.

How HP Is Eyeing Growth in Its Printer Segment

3D printing

While HP is pleased with execution in its core segments, it’s looking to increase investments in 3D (three-dimensional) printing technology. While these investments have negatively impacted EPS (earnings per share), HP is confident about the long-term revenue growth in 3D printing.

HP values the $12.0 billion 3D printing manufacturing industry. Currently, the 3D printed plastics vertical is driving revenue growth and is the largest market in this space. Several companies now realize the benefits of 3D printing, which is expected to significantly drive demand for HP.

Jabil (JBL) is now one of HP’s biggest 3D printing customers. General Electric (GE) has acquired several companies in the 3D market. In fiscal 3Q17, HP launched its 3D printing business in the Asia-Pacific region, the largest manufacturing market globally. HP has expanded into Greater China (FXI), South Korea, Japan, Australia, and Singapore.

Global 3D printer market on a growth spiral

17 July 2017

 

3d

The global 3D printer market continues to grow with sales up 18 per cent in 2016.

Demand for 3D printers is strongest within the Asia-Pacific region. However, the North American market, despite a small recovery, still saw sales down from the previous 12-month period, according to research firm IDC.

Shipments in specialist manufacturing for the technology sector saw the largest growth at 30 per cent. Meanwhile, sales of powder-bed fusion-based printers increased by almost 40 per cent.

Keith Kmetz, program vice president-3D printing at IDC, said:“3D printing will enable revolutionary opportunities in commercial and industrial applications, with earliest success in manufacturing and healthcare. Our predictions create a framework for IT and line-of-business executives to plan and execute technology-related initiatives in the year ahead.”

According to IDC, ‘Discrete Manufacturing’ is the dominant industry for 3D printing, delivering more than two thirds of all worldwide revenues through much of the forecast.

While all the industries examined will experience revenue growth of more than 100 per cent over the forecast period, healthcare will leap from the number five position in 2016 to the number two spot in 2020, with revenues growing to more than US$3.1 billion.

IDC said the gains in both software and on-demand parts printing are being driven by the rapidly expanding use of 3D printing for design prototyping and products that require a high degree of customisation in non-traditional environments.

Another report on the 3D printing market by Markets and Markets predicts that the sector will be worth around US$30 billion by 2022.

The desktop 3D market is expected to see the highest growth rate with the education sector driving growth.
Laser metal deposition (LMD) printing technology will also continue to grow, resulting in a reduction of material waste during the printing process, tooling costs and cost of repairs.

3D Systems: Shrinking Cannot Help Growth

Summary

Company discontinuing production of Cube consumer printer.

Revenue generation was already company’s biggest issue.

A large chunk of the recent rally has been wiped out.

3D Systems Corp.On Monday morning, 3D Systems (NYSE:DDD) announced that it would stop production of its $999 consumer 3D printer, the Cube. With the 3D printing business not taking off in recent years as hoped, the company has struggled to grow revenues and is looking for better returns on investments and higher earnings. Unfortunately for the stock, another hit to revenues and the associated write down has eliminated a large chunk of the recent rally.

I understand that the current management team, which includes an interim CEO, is looking for ways to improve the business. However, the consumer 3D printing market was supposed to be a huge part of this industry’s growth over the next couple of years. 3D Systems has underperformed in a significant way, with revenue estimates for this year coming down dramatically in the past year and a half.

Source: Yahoo! Finance analyst estimates

In the press release, management stated that revenues will be impacted by less than 2%. While that doesn’t seem like much, we’ve seen the overall revenue estimate for this year come down by $287 million since July 2014. Now, the company is talking about taking off another $12.5 million or so of revenues, and this year was already projected to see a 1.4% decline. When your biggest problem is revenue generation, eliminating part of your business doesn’t always seem like the best idea.

Management says that the move will help with profitability, but that’s after the huge write-down of inventory. Don’t forget, analysts are using non-GAAP earnings for their EPS estimates, as the company’s true bottom line number is actually much worse. In 2016, analysts were looking for a non-GAAP EPS rebound to $0.28, after $0.13 this year and $0.70 in 2014. Part of Monday’s news will help with that EPS rebound, but we’re still talking about a business in much worse shape than it was in 2014, and we are only looking at adjusted EPS.

I also believe that this announcement was poorly timed, as we had recently seen a shift in sentiment regarding this stock. Shares were looking to find a bottom, and a number of shorts were covering. In fact, as you can see in the chart below, short interest was at its lowest point since May 2014. That’s despite a roughly 7 million share, or 7% increase, in the stock’s float. The number of investors betting against this stock had finally started to turn.

Source: NASDAQ DDD short interest page

As the company looks to overhaul the business, management believes stopping production of the Cube will help with profitability, after taking out the necessary write-down of course. Unfortunately, this was a company that was struggling to grow revenues, so chopping off another 2% or so of the top line hits the company where it hurts most. Shares of the company had recently started to rebound from their multi-year lows, and short interest was continuing to fall, but about 30% of the recent rally has been eliminated thanks to this decision. This news puts an end to the company’s dreadful 2015 year, but if we see more announcements like this in the coming weeks, it wouldn’t surprise me if shares retest their 52-week low.

3D Printing 2015-2025 Industry Key Trends, Size, Growth, Shares And Forecast Research Report …

Albany – NY, Oct. 21, 2015 (GLOBE NEWSWIRE) — This 138 slide report (PDF) covers the current and future status, opportunities and market forecasts of 3D printing. It contains many illustrative and analytical figures and tables plus company profiles from across the globe.Upon request the original PowerPoint can be included free of charge as part of the report purchase.3D Printing3D printing has received much attention in the press over recent years. Hyped as the technology to bring about a 3rd industrial revolution, 3D printing technologies were in fact invented in the early 80s. They remained a niche technology until the expiration of a key patent in 2009 allowed many startups to emerge offering cheap consumer-level 3D printers. A media frenzy in 2012 thrust 3D printing into the limelight and major players are reporting dramatic growth in everything from consumer to high-end metal printers.Get Sample Research Report: http://www.researchmoz.us/enquiry.php?type=S&repid=2362983D printing encompasses a variety of different printing processes. The processes are all primarily additive in nature, as materials are deposited only where needed, and thus results in significantly less materials wastage than traditional manufacturing techniques. 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We also present detailed forecasts for the future of the 3D printing market.Browse full report at: http://www.researchmoz.us/3d-printing-2015-2025-technologies-markets-players-report.htmlThe following technologies are covered in detail including lists of all major vendors for each technology type and SWOT analyses with quantitative data and references to vendors:StereolithographyDigital Light ProcessingInkjetted photopolymersThermoplastic extrusionSelective Laser Sintering of plasticsSelective Laser Melting of metalsBlown metal powderWeldingSand bindingBinder jetted into metal powder (by ExOne)Smooth Curvature Printing (by Solidscape)Selective Deposition Lamination (by Mcor Technologies)Hybrid CNCThis report gives forecasts to 2025 in the following forms:Market forecast by industry (bioprinting, automotive, aerospace, consumer products, medical, oil & gas, hobbyist, dental, education and jewelry)Market share by industryMarket forecast growth by industryMarket forecast by revenue stream (printer, materials, services)Market forecast for printers and materials by price.Market forecast for printers and materials by technology type.Mapping the 3DP landscape by size, precision, speed and price.Applications are detailed for:Manufacture of flight-critical production parts in metalsMold making for metal castingEdutainmentArtModellingRapid prototypingToolingBrowse all reports of ICT category at: http://www.researchmoz.us/ict-market-reports-96.htmlThe trillion dollar oil & gas industry is an emerging user of 3D printing with the highest forecast growth followed by the more established aerospace industry. When significant penetration has occurred into the above markets, 3D printing in these big industries will lock into the capital expenditure cycles associated with them, and, as is the case for other CNC machines, periodic fluctuations in sales will occur — growth will not be steady and monotonic.18 major players and eight end users in 3D printing are profiled, and the report is also informed by interviews with companies and institutions throughout the value chain.About UsResearchMoz is the world’s fastest growing collection of market research reports worldwide. Our database is composed of current market studies from over 100 featured publishers worldwide. Our market research databases integrate statistics with analysis from global, regional, country and company perspectives. ResearchMoz’s service portfolio also includes value-added services such as market research customization, competitive landscaping, and in-depth surveys, delivered by a team of experienced Research Coordinators.Mr. Nachiket Ghumare

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