X
Business

HP: No tech slowdown here

HP on Tuesday quelled a lot of worries by delivering stronger than expected fiscal first quarter earnings and raising its outlook for the second quarter.The IT giant, viewed as a proxy for enterprise spending, delivered net income of $2.
Written by Larry Dignan, Contributor

HP on Tuesday quelled a lot of worries by delivering stronger than expected fiscal first quarter earnings and raising its outlook for the second quarter.

The IT giant, viewed as a proxy for enterprise spending, delivered net income of $2.1 billion, or 80 cents a share, on revenue of $28.5 billion, up from 13 percent a year ago (statement). Excluding charges, HP had earnings of 86 cents a share. That tally handily topped Wall Street estimates calling for earnings of 81 cents a share, according to Thomson Financial.

The outlook was also strong. HP said it expects second quarter earnings to be about 77 cents a share to 78 cents a share. Excluding charges, HP projected earnings of 83 cents a share to 84 cents a share, compared to Wall Street estimates of 81 cents a share. HP projected second quarter revenue of $27.7 billion to $27.9 billion compared to estimates calling for $27.4 billion.

For fiscal 2008, HP said revenue will be about $113.5 billion to $114 billion. Analysts were expecting about $111.7 billion. HP said earnings for fiscal 2008 will be about $3.26 a share to $3.30 a share. Excluding charges, HP projected $3.50 a share to $3.54 a share.

By the numbers:

  • By geography, HP reported revenue in the Americas of $11.2 billion, up 8 percent from a year ago. Revenue in Europe, the Middle East and Africa was up 15 percent to $12.3 billion due to a weak dollar. Asia Pacific sales were up 22 percent from a year ago to $4.9 billion.
  • The U.S. slowdown is manageable. HP's revenue from outside the U.S. was a whopping 69 percent. That stat is probably the most important in figuring out how HP is avoiding the U.S. economic malaise.
  • Inventory on the books as of Jan. 31 was $7.94 billion, down from $8 billion as of Oct. 31.
  • HP's personal systems group had revenue of $10.8 billion in the fiscal first quarter, up 24 percent from a year ago. This growth was propelled by notebook revenue up 37 percent, but desktop sales weren't bad either (up 15 percent). Commercial revenue was up 22 percent with consumer sales up 29 percent. Operating profit was $628 million.
  • Enterprise storage and servers delivered first quarter revenue of $4.8 billion, up 9 percent from a year ago. Blade revenue was up 81 percent. Server and storage revenue was up 11 percent and 10 percent, respectively. Operating profit was $673 million.
  • Printer and imaging sales grew at a 4 percent clip to $7.3 billion. Supplies grew at a 6 percent clip. Printer unit shipments were anemic growing at a 1 percent clip. Consumer printer units were down 2 percent, but commercial units were up 13 percent. HP's printer business remains a cash cow with an operating profit of $1.2 billion.
  • HP reported services revenue of $4.4 billion, up 11 percent from a year ago. Outsourcing revenue led the charge up 15 percent from a year ago. Operating profit was $489 million.
  • The software business remains the smallest HP unit with sales of $666 million, up 19 percent from a year ago. Operating profit was $51 million.

In addition, here's a handy chart of HP's breakdown by product line.

Editorial standards