) recently announced that it has resolved a patent infringement
lawsuit pertaining to ink cartridges with Rio Branco Ltda. HP had
sued Rio Branco in April last year.
Rio Branco Ltda., is a Brazilian distributor of Maxprint brand
cartridges that are compatible with H-P printers. H-P had sued the
Brazilian distributor over importing and selling the HP-compatible
cartridges in Brazil.
Following the settlement, H-P's patents remained valid, and Rio
Branco will no more be selling Maxprint cartridges. Maxprint will
have to sell its inventory by December 1. Maxprint is also going to
pay some of the litigation costs incurred by H-P.
However, H-P is exploring other channels to strengthen its
presence in the Brazilian market. Some companies such as Canal
Verde, Edeltec, Suprijet have confirmed that H-P's patents are
valid and they have agreed to stop selling products that infringe
upon H-P's patents.
However, HP's printing business continues to see many
challenges, stemming mainly from macroeconomic concerns and secular
changes in the printing market. While
(LXK) exit from the printing business could improve chances of
share gains, this is not likely to be meaningful in the long term,
as the inkjet market continues to shrink due to the easy
availability of mobile media devices such as tablets and
smartphones, which are reducing the need for taking printouts.
Margins in the services business are also likely to remain weak
The company is in dire need of rebounding, as it is constantly
losing profit and market share. HP is implementing various
strategies to generate growth. As discussed, the company is
implementing some major restructuring actions to manage costs,
drive growth and improve the health of its balance sheet.
Currently, the company retains a Zacks #3 Rank (Hold).
HEWLETT PACKARD (HPQ): Free Stock Analysis
To read this article on Zacks.com click here.