Hewlett Packard Profits Up
Hewlett Packard Profits Up
August 17th, 2006: Printing and imaging strong. Storage and Servers also provide good news for HP shareholders. However, much of the good news is tempered with cost-cutting measures including thousands of staff lay-offs.
Hewlett Packard, which is seen by many analysts as a barometer for the entire technology industry, is beating the drum regarding its recent financial report, but that drum is being dampened by CEO Mark Hurd. Commenting on the good financial news, Hurd said, "By no means am I saying that we rolled a perfect quarter, we still have a lot of work to do."
Imaging and printing (up 5%), servers and storage (up 5%) played a large part in the growth. However, so did short-term cost cutting measures such as property sales and 10,000 staff lay-offs. During the quarter, on a year-over-year basis, revenue in the Asia Pacific grew 7% to US$3.8 billion - adjusted for the effects of currency this is 8%.
The results for the third fiscal quarter ended July 31, 2006, saw net revenues of US$21.9 billion, representing growth of 5% year-over-year, or 6% when adjusted for the effects of currency. GAAP operating profit was US$1.5 billion and GAAP diluted earnings per share (EPS) was US$0.48 per share, up from US$0.03 in the prior year period. GAAP financial information for the third quarter 2005 reflects a tax adjustment resulting from HP's decision to repatriate US$14.5 billion in cash from foreign earnings.
Imaging and Printing Group Imaging and Printing Group (IPG) revenue grew 5% year-over-year to US$6.2 billion. On a year-over-year basis, supplies revenue grew 9%, commercial hardware revenue grew 3% and consumer hardware revenue declined 3%. Printer unit shipments increased 15% year-over-year, with consumer printer hardware units up 13% and commercial printer hardware units up 23%. Momentum in key growth initiatives continued, with All-in-One unit shipments up 17% year-over-year, color laser printer shipments up 70% and printer-based MFP shipments up 196%. Operating profit was US$884 million, or 14.2% of revenue, up from a profit of US$771 million, or 13.0% of revenue, in the prior year period.
Enterprise Storage and Servers Enterprise Storage and Servers (ESS) reported revenue of US$4.1 billion, up 3% over the prior year period. On a year-over-year basis, industry-standard server revenue increased 6%, with blade revenue growth of 37%. Networked storage revenue grew 5%, led by continued strength in external arrays, where high-end XP revenue grew 19% and revenue in the mid-range EVA line increased 17%. Business critical systems revenue declined 6%, as Integrity systems growth of 76% was offset by declines in PA-RISC and Alpha. Operating profit was US$296 million, or 7.2% of revenue, up from a profit of US$147 million, or 3.7% of revenue, in the prior year period.