HP lifts lid on Q4 fortunes

Mark Hurd: Solid quarter for HP

HP’s fourth quarter results provided an intriguing snapshot of the wider market as falling desktop, printer and server revenues were offset with strong sales of notebooks, storage and services.

HP saw total revenues for the three months to 31 October spike 19 per cent year on year to $33.6bn (£22.3bn). With currency effects and recent acquisition EDS stripped out, revenue growth hit 2 per cent.

Operating profits increased 4 per cent to $3.4bn and chief executive Mark Hurd seemed happy with the results, cramming the words “strong”, “strength” and “solid” into his 22-word opening sentence in the accompanying statement.

But digging deeper into HP’s five main groups, it was a mixed bag of results.

HP’s largest unit, Personal Systems Group (PSG), was one of the stronger performers. Although desktop revenues declined 2 per cent, a 21 per cent jump in notebook sales ensured PSG revenues grew 10 per cent to $11.2bn. Operating profit increased from $589m to $616m.

The Imaging and Printing Group’s (IPG) performance was less impressive as revenues declined 1 per cent to $7.5bn. Although supplies sales grew 9 per cent, the group was hit by a 21 per cent drop in consumer hardware revenue. Operating profits improved from $1.1bn to $1.2bn.

Enterprise Storage and Servers (ESS) revenues also declined by 1 per cent. Storage was a high point within this group, growing 13 per cent, while Industry Standard Server and Business Critical Systems declined 3 and 10 per cent respectively. The bottom line also slipped back with operating profits falling from $736m to $705m.

HP Services (HPS) became HP’s second largest group during the quarter courtesy of the EDS acquisition. Revenues virtually doubled to $8.6bn, while operating profit rose from $515m to $920m. Without EDS, HPS revenue grew 10 per cent.

Finally HP Software grew 13 per cent to $855m.