Hewlett-Packard Stock Prediction: Buying Samsung’s Printer Business Fortified Hewlett-Packard’s Leadership

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First.

Hewlett-Packard Stock Prediction

Summary:

  • Hewlett-Packard is already a leader in home, office, large-format, and short-run production printers.
  • The $1.05 billion buy-out of Samsung’s printer business will only strengthen HP’s leadership in printers.
  • The purchase includes taking ownership of Samsung’s 6,500 patents on printers and printing. Samsung’s printer business will help Hewlett-Packard improve its laser printer product portfolio.
  • The shift to continuous ink supply system will also help compete better with the inkjet printers of Epson, Brother, and Canon.
  • Hewlet-Packard has strong buy signals based on its stock’s algorithmic forecasts from I Know First.

Based on IDC’s most recent report, Hewlett-Packard (HPQ) is still the runaway leader when it comes to home and office printers. Although it posted a -13.7% Year-over-Year growth in Q2 2016, HP still has 36.6% market share of the Worldwide Hardcopy Peripherals market.

This is still much bigger than second-place Canon (CAJ), which has 20.6% share, and third-place Epson’s 17% share.

Hewlett-Packard Stock Prediction

HP’s $1.05 billion acquisition of Samsung’s (SSNLF) printer business will only fortify its No.1 status in printers. Samsung is the fifth biggest vendor of printers with a 4% global market share. This acquisition will give Hewlett-Packard almost 41% share in the worldwide $55 billion/year hardcopy peripherals market.

Samsung will probably use the $1.05 billion to pay off the expenses it incurred from recalling its latest Galaxy Note 7, which was hampered by exploding batteries. Hewlett-Packard will get access to Samsung’s laser and dye sublimation printers. It will also get ownership of 6,500 Samsung patents related to printers and printing technology. Hewlett-Packard will also acqui-hire 1,300 engineers and scientists from Samsung’s printer division.

 

Why Investors Should Care

Fortifying its presence in the $55 billion global hardcopy peripherals industry is a great reason to go long on HPQ. Unlike the PC market, Hewlett-Packard has less competition. No. 1 PC vendor Lenovo (LNVGY) is not yet involved in the printer/copier business. Dell, who allegedly rebrands Fuji Xerox and Samsung printers, is already quitting the printer business after HP’s buy-out of Samsung’s printer division.

The last time I checked, there’s still no Chinese phone or PC vendor that is also expanding to inkjet or laser printers. Expanding the printing division therefore is a long-term tailwind for Hewlett-Packard. IDC already predicted that the Samsung printer business acquisition will help Hewlett-Packard break the monopoly of Fuji Xerox, Canon, and Rico over China’s printer market.

IDC analyst Donna Wang also declared that Samsung’s 6,500 patens will help HP improve its previous lack of core technology in laser printing. It means the future promises better HP-branded laser printers and copiers which could help the company attract more customers.

In my case, I love the small dye sublimation printers of Samsung. They are great for events location-based photobooth printing. I hope Hewlett-Packard will revive the portable dye sublimation printers of Samsung so that wedding/events photographers will have another alternative to HiTi, Canon, DNP/Fotolusio, and Mitsubishi’s dye sublimation printers.

HP’s Entry in Ink Tank Inkjet Printers Is Also A Tailwind

Epson is the pioneer in releasing ink tank-based CISS (Continuous Ink Supply Systems) inkjet printers. Epson released its first Ink Tank L100/L200 inkjet printers in 2010. Brother Industries also released its InkBenefit CISS inkjet printers in 2012. Last year, Canon also released its CISS Pixma G1000/G2000/G3000 inkjet printers.

Earlier this year, Hewlett-Packard has also came up with its first ever CISS inkjet printers. This will allow it to compete better in the inkjet printer industry. CISS printers are deemed to be more economical than old ink cartridge-based printers. Epson’s rapid rise to the top of the worldwide hardcopy peripherals market is definitely thanks to its ink tank L-series CISS inkjet printers.

HP’s decision to release its the DeskJet GT 5820 AiO multi-function printer will help it regain old inkjet printer customers who abandoned it for Epson or Brother’s CISS printers. The DeskJet GT 5820 and its ink products are priced competitively against other popular CISS multi-function (print/scan/copy) inkjet printers. People (like me) and companies who prefer CISS inkjet for their documents and instant photo printing will now have to add HP to their brand choices.

Hewlett-Packard Stock Prediction

(Source: Wirth Consulting)

Conclusion

I endorse HPQ as a strong Buy for long-term investment. Unlike the PC hardware business, the printing industry is still a growing business concern that Hewlett-Packard currently dominates. The acquisition of Samsung’s printer division will help HP expand its laser/dye sublimation printer products. HP is now also capable of competing with the CISS ink tank inkjet printers of Epson, Canon, and Brother Industries.

Hewlett-Packard is also dominant the still-growing global large format printers. According to IDC’s latest report, HP has 46% market of the Worldwide Large Format Printer industry. HP’s large format printer shipments also posted an 8% year-over-year growth in Q2 2016.

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The acquisition of Samsung’s printer division (and patents) could also help HP increase its market share in the global market for production printers. The global industry for production printers are currently dominated by Japanese firms Fuji Xerox, Ricoh, Konica Minolta, and Canon Group.  As of Q2 2016, Hewlett-Packard is ranked no.5 and only has 2.3% share in the global production printer industry.

My buy rating for HPQ is strongly backed by its strong buy signals from the algorithmic market trend forecasts of I Know First. Hewlett-Packard is a giant in the printing industry and it is still growing. Please add HPQ to your long-term portfolio. I am highly confident it will eventually give you profit. Just trust me and trust the deep learning neural network computers of I Know First.

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This forecast was sent out to I Know First subscribers on September 23, 2016. To subscribe now click here.


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