HP reports Q4 profit, strong software sales

IDG News Service - Buoyed by a sharp improvement in its software business, Hewlett-Packard Co. reported a quarterly profit on Monday.

The company reported net earnings of $2.3 billion, or 86 cents per share, for the fourth quarter ended Oct. 31, compared with net income of $1.9 billion for the year-earlier quarter. Earnings beat estimates from Thomson Financial analysts, who projected net income of $2.184 billion and earnings per share of 82 cents. The earnings are based on a non-GAAP (generally accepted accounting principles) basis.

HP recorded fourth-quarter net revenue of $28.3 billion for the quarter, a 15% year-over-year increase.

The company took a $30 million charge related to licensing its manufacturing, distribution and design of HP cameras so that it can concentrate on its home photo printing and online photo services.

Net revenue for fiscal 2007 was $104.3 billion, a 10% growth year over year. HP recorded operating profit of $9.6 billion.

The company's software revenue doubled year over year to $698 million, said Mark Hurd, CEO and president of HP, in a conference call following the earnings announcement. Hurd attributed the software rise partly to the acquisition of Mercury Interactive Corp., which HP bought for $4.5 billion last year.

Notebook revenue grew 49% year over year, with more people using mobile devices to access digital content, Hurd said. The world is going mobile, especially in emerging markets, he said.

China is becoming a key market for HP, Hurd said. HP's Personal Systems Group, which sells PCs and laptops, recorded a 100% growth in China, making it the group's third-largest market. HP is selling products in around 400 Chinese cities with more expansion planned, Hurd said. Overall revenue in the emerging BRIC (Brazil, Russia, India and China) markets grew 37%, Hurd said.

Hurd said he was pleased with 78% increase in x86 blade server revenue, he said. The Enterprise Storage and Servers group reported revenue of $5.2 billion, a 10% increase over the previous year.

Despite steady growth across all segments, Hurd said there was more room to grow. "HP still has room to improve, but we like how we are positioned," he said.

The company estimated its revenue for fiscal 2008 to be $111.5 billion.