HP HPQ, -0.21% revealed Wednesday that one of its biggest money-makers, selling printing supplies, faces new pressure due to internet sales, which is squeezing previously juicy margins, especially in some overseas markets. HP seemed to be taken by surprise that customers buy their printing supplies online, where they said they have less of the market and pricing isn’t to HP’s benefit.
The PC and printer giant reported fiscal first-quarter results that were weaker than expected, mostly due to an unexpected 3% revenue drop in the supplies business. A decline in HP’s stock after the numbers hit worsened considerably as the company’s conference call went on, ultimately ending up with a near 13% decline in after-hours trading.
“More online purchasing has also led to a growing market for alternatives,” said an HP spokeswoman. “We are implementing share improvement plans, including online programs and targeted marketing, to address this.” HP’s forecast calls for the slowdown in supplies to continue through the rest of the year, citing pricing issues and high inventories. HP said supplies revenue will be down about 3% this year, after previously guiding for that revenue to be flat or to gain slightly in 2019.
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