While some Wall Street analysts are downgrading HP, some of its partners view the shift in its managed print services model as a positive. HP last week unveiled its plan to phase out discounts on printer models that are capable of using non-HP supplies while retaining subsidies on models that only work with HP-branded supplies.
Argus analyst Jim Kelleher downgrades HP to hold from buy, noting that HP's most profitable print and imaging business is hurt by the switch to e-commerce in printing supplies. In the past six months, HP has slumped 16% vs. information technology sector median performance of -3.5%. Last week, it announced a major restructuring that will include the elimination of 7,000-9,000 jobs from its workforce of 55,000 over the next three years, which the company says ultimately will save $1bn/year.
The shift to print services will occur over a multi-year period and will only apply to HP's transactional business, not contractual managed print services for channel partners, it says.
Furthermore, HP is accelerating its transition into services, said incoming HP CEO Enrique Lores.
