Hewlett-Packard Co. has joined a number of big-name technology companies attempting to pull off a very difficult trick – switching from their core businesses to something more profitable.
When HP posts its third-quarter earnings on Wednesday, investors and analysts will be watching to see if the company can continue to go against the trend of declining fortunes in the personal computer market.
On average, analysts expect the company to post earnings per share of 86 cents and revenue of $27.25-billion (U.S.). Both numbers are down from the same period last year.
HP posted a positive surprise during its last earning announcement, in part due to increasing revenue from its printing and services unit.
Like HP, BlackBerry Ltd. has been trying to focus more of its energy on software services. The move is not uncommon for tech firms that started suffering from decreasing hardware sales.
One of the most well-known examples of this phenomenon is IBM, which used to build desktops and laptops. The company eventually sold its PC division to China's Lenovo Group Ltd., and has focused almost entirely on services ever since. Dell Inc. has also tried to move further away from hardware sales and into services, as its traditional PC sales keep tanking and its attempt to build smartphones and tablets flopped.
Almost every indicator has shown the traditional PC market to be in a severe downward spiral. Lenovo, one of the few PC makers posting positive results, is doing so primarily because of its mobile division, which has shown triple-digit percentage growth over the past year, even as PC sales barely show any growth.
HP has also tried numerous times to enter the mobile market, so far with little success. The company previously tried releasing an iPad competitor, using some of the technology it acquired when it purchased smartphone-maker Palm Inc. However, the product did so poorly that the company was forced to discontinue it a few months later.
Investors will be watching closely this week for any insight on HP's future plans for mobile devices. They will also seek more clarity on CEO Meg Whitman's larger turnaround efforts, which have included a large round of layoffs and a greater emphasis on the company's imaging and services divisions.