HP 2015 Annual Report Download - page 66

Table of Contents
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Personal Systems net revenue decreased 8.3% (decreased 3.1% on a constant currency basis) in fiscal 2015. The net revenue decline in Personal Systems
was due primarily to unfavorable currency impacts, particularly in EMEA, and weakening market demand. Personal Systems net revenue decreased as a result
of a 5% decline in average selling prices ("ASPs") and a 3% decline in unit volume. The decline in ASPs was due primarily to unfavorable currency impacts, a
shift in consumer PCs to low end products and a lower mix of commercial PCs within Personal Systems. The unit volume decline was due primarily to a unit
volume decline in desktops, partially offset by a unit volume growth in notebooks, both consumer and commercial.
Net revenue for commercial clients decreased 8% due primarily to unfavorable currency impacts, a decline in commercial desktops as a result of weak
market demand and higher net revenue in the prior-year period resulting from the replacement of the Windows XP operating system. Net revenue for
consumer clients decreased 8% due primarily to unfavorable currency impacts and a decline in consumer desktops. Net revenue declined 17% in Desktop
PCs, 2% in Notebook PCs, 9% in Workstations and 8% in Other. The net revenue decline in Other was due primarily to a decline in consumer tablets, the sale
of IP in the prior-year period, and unfavorable currency impacts, the effects of which were partially offset by increased sales of extended warranties.
Personal Systems earnings from operations as a percentage of net revenue decreased by 0.3 percentage points for fiscal 2015 as a result of a decline in
gross margin combined with an increase in operating expenses as a percentage of net revenue. The decline in gross margin was due primarily to unfavorable
currency impacts and a lower mix of commercial products, partially offset by favorable component costs and operational cost improvements. Operating
expenses as a percentage of net revenue increased due primarily to the size of the net revenue decline, higher administrative expenses as a result of lower bad
debt recoveries as compared to the prior-year period and higher R&D investments in commercial, mobility and immersive computing products, the effects of
which were partially offset by a decline in field selling costs as a result of favorable currency impacts and operational cost improvements.
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Personal Systems net revenue increased 6.6% (increased 7.2% on a constant currency basis) in fiscal 2014. While the Personal Systems business
continued to be challenged by the market shift towards mobility products, the pace of the PC market decline slowed with signs of stabilization driven by
growth in commercial PCs, the effects of which were partially offset by weakness in consumer PCs. The revenue increase in Personal Systems was due to
growth in commercial PCs, particularly notebooks, along with growth in consumer notebooks. Personal Systems experienced revenue growth across all
regions led by double digit revenue growth in EMEA, which experienced improved demand. The revenue increase was driven by an 8.2% increase in unit
volume, the effects of which were partially offset by a 1.5% decline in ASPs. The unit volume increase was primarily led by growth in commercial notebooks
as well as strength in commercial desktops, consumer notebooks and thin client products. The decline in ASPs was due primarily to a competitive pricing
environment and unfavorable currency impacts, the effects of which were partially offset by a favorable mix of commercial PCs.
Net revenue for commercial clients increased 10% due primarily to the benefits from the delayed installed base refresh cycle, the effects of customers
migrating from the Windows XP operating system and growth in all product categories partly driven by new product introductions, including the HP Elite
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Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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