CORRECTION: HP sees print unit sales up 4-6 pct
(Company corrects operating margin targets to 14-15 percent for fiscal 2008 and 14.5-15.5 percent for fiscal 2009; removes reference to different targets in quote)
By Georgina Prodhan
DUESSELDORF, Germany (Reuters) - Hewlett-Packard <HPQ.N>, the world's biggest maker of PCs and printers, sees sales growth at its imaging and printing unit stable or slightly lower this year as it focuses on its digital graphics business.
"We would like to grow our business 4 to 6 percent in revenues," Vyometh Joshi, executive vice president in charge of the unit, told Reuters on Friday in an interview at the Drupa print media trade fair in Duesseldorf, Germany.
HP said it aimed for an operating margin of 14-15 percent this fiscal year and 14.5-15.5 percent next year at the imaging and printing group.
Sales at the unit grew 6 percent last fiscal year to $28.5 billion -- about a quarter of the company's total revenues. The unit contributed almost half of HP's operating profit.
The unit is helped by a lucrative business in printer cartridges which customers must keep buying to keep their HP printers running.
Joshi said, however, he saw the future in digital graphics, which had now caught up to an acceptable extent with analogue printing methods in cost and quality, if not yet in speed.
In its favor, digital printing is far more flexible, and so more cost-efficient for smaller print runs, Joshi said. For example, changing details for a printed label could take months using analogue, compared with days for digital.
PAGES, NOT PRINTERS, IN FOCUS
Although HP has 46 percent global market share in printers, Joshi said, it accounted for just 1.6 percent of the 50 trillion pages printed worldwide last year, a $781 billion market, because more than 90 percent still used analogue methods.
"Instead of focusing just on the printers, we are focusing now on the pages. That's how we can continue to grow," he said.
HP estimates the value of pages printed in the global graphic arts market will be $663 billion by 2010.
After the digitalization of music and photos, which are already well advanced, labels, marketing materials and books will follow in the next few years, Joshi predicted.
He referred to Google's <GOOG.O> ambitious project to scan all the world's books that are out of copyright, which has already gathered digital versions of more than a million books.
"If you want to get a book that's out of print, digital is the way to do it, because you only print one copy," he said.
HP has made several acquisitions in the graphic arts field in the last few years, including most recently that of Israel's NUR Macroprinters in March for $118 million.
Joshi spoke to Reuters as HP showed a new digital printing press for the first time at the Drupa fair, which is due to come to market in the second half of next year.
The Inkjet Web Press is aimed mainly at medium-sized to large providers of print services and could revolutionize the way that local newspapers, for example, are printed, he said.
Instead of relying on the huge printing presses owned by media groups such as News Corp. <NWSa.N>, local papers could own their own production or go to smaller, closer-by providers.
Product manager Mike Neuffer said the target price for the Inkjet Web Press was around $2.5 million to $3 million, although no prices had yet been set.
The press can print at rates of up to 122 meters per minute, HP says. Joshi said this was about half the speed analogue alternatives can produce.
Neuffer said such printing presses could also be useful for national or international newspapers for regional print and distribution purposes.
(Editing by Sue Thomas)