HP results lifted by laptop PCs, EDS buyout

Chairman and CEO Mark Hurd remains upbeat about the results

Hewlett-Packard Co. reported a 19% jump in revenue for the October quarter, lifted by its EDS acquisition and strong sales of laptop computers and blade servers.

The company's printer and desktop PC businesses didn't fare as well, however; results from HP's enterprise hardware business were mixed.

Chairman and CEO Mark Hurd was upbeat about the results, saying HP's geographic reach and wide product portfolio are helping to shield it against the effects of the tough economy. But like his peers at other big tech companies, Hurd was cautious about the future.

"We think it will be a challenging environment, and we're planning as such," he told reporters during a conference call to discuss the results.

Revenue for HP's fourth fiscal quarter, which ended Oct. 31, was $33.6 billion, up 19% from a year earlier, or up 5% excluding the effect of the EDS acquisition. Net profit was $2.1 billion, down from $2.2 billion in the same quarter last year. Excluding one-time charges, net profit climbed 13% to $2.6 billion.

HP had already preannounced its financial results last week, so Monday's news was more about seeing which product divisions did well and which fared poorly.

Revenue from HP's personal systems group climbed 10% to $11.2 billion, with unit shipments up 19%. A 21% jump in laptop sales offset a 2% decline in HP's desktop PC business.

Revenue from its imaging and printing group declined 1% to $7.5 billion. Sales of printer ink and other supplies climbed 9%, but sales of actual printer hardware declined by 21% in the consumer market and 10% to businesses.

The enterprise storage and servers division also reported a slight dip in revenue, falling 1% to $5.1 billion. HP's storage gear and blade servers sold well, but revenue from industry-standard and high-end servers declined, HP said.

Revenue from the services division almost doubled to $8.6 billion, mostly from the EDS buyout, while revenue from software increased 13% to $885 million.

Despite the cautious outlook, Hurd sounded more confident on the call than the heads of some other big tech companies, notably Intel Corp., Dell Inc. and SAP AG, which have all discussed a sharp slowdown in customer spending. "I'm confident in HP's ability to gain share, expand earnings and emerge from the current environment in a meaningfully stronger competitive position," Hurd said.

"We believe that we held or gained share in every segment" during the quarter, he added.

For the current quarter, HP expects revenue of between $32 billion and $32.5 billion, with earnings per share of 80 cents to 82 cents on the basis of generally accepted accounting principles. For the full year, it expects revenue between $127.5 billion and $130 billion, and GAAP earnings per share between $3.38 and $3.53.

Copyright © 2008 IDG Communications, Inc.

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