Hewlett-Packard, the world's largest PC vendor, officially released its fourth-quarter earnings, which showed that while's HP's revenue increased, the company's net earnings slipped. HP CEO Mark Hurd said the company will face a "challenging" market for PCs in 2009. Hurd added that HP will also look to cut spending in 2009 as the company adjusts to the strains of the ongoing financial crisis.
Despite posting an upbeat fourth-quarter financial report, Hewlett-Packard
CEO Mark Hurd warned that company will face
a "challenging" PC market in 2009, leaving the door open for more cost cutting
in the coming year.
the world's largest PC vendor,
officially posted its fourth-quarter
financial results Nov. 24. The company had already released preliminary numbers
Nov. 18, which took much of the drama out of the release of the official
In the fourth quarter, HP
reported that its revenue for the fourth financial quarter stood at $33.6
, an increase of 19 percent from a year ago. HP also reported that
the company is expecting earnings of 84 cents a share this quarter, or $1.03
per share when those numbers are adjusted. HP saw earnings of 86 cents a share
a year ago. However, HP did report that its net earnings dropped 2 percent year
over year from $2.2 billion in 2007 to $2.1 billion this quarter.
While HP's numbers were a silver lining in the IT market that saw Advanced
Micro Devices and Sun
announce job cuts in the last month, Hurd warned that the
company will face a challenging global market in 2009, especially when it comes
"We're guiding conservatively, or I should say conservatively down from
where we have been," said Hurd when asked about the PC market in 2009. "We are
trying to be cautious, and we are trying to be thoughtful in the revenue
[forecast] we are giving. We think it will be a challenging environment, and we
are planning as such."
Hurd's concerns about the 2009 PC market reflected a similar outlook that CEO
Michael Dell offered just a week before, when his company announced its latest
Michael Dell said his company, the world's second-largest
maker of desktops and notebooks, was taking a "conservative" approach to the PC
market in the next year.
Even with those warnings, HP showed that its ability to sell PCs both in the
United States and
overseas helped the company's bottom line in an unstable financial environment.
During its financial fourth quarter, HP's PC division watched its revenue
increase 10 percent to $11.2 billion and shipments increased 19 percent.
While HP's notebook revenue increased 21 percent, its desktop revenue fell 2
percent. HP also managed to grow its commercial client revenue by 7 percent
despite the financial crisis and concerns
that enterprises are starting to cut hardware spending.
A lot of HP's success in the PC market, both in terms of revenue and
shipments, comes from overseas sales. In the fourth quarter, HP reported that
68 percent of its revenue comes from outside the United
In his comments to reporters, Hurd noted that to continue growing HP's share
of the PC and other IT markets, he will cut some $1 billion in expenses from
the company's budget in the coming year. While Hurd did not offer specifics, HP
is expected to cut back on discretionary spending, such as travel, and cut back
on hiring. HP already announced that it will shut down for an extra week during
the 2008 holiday season.
"There is never a time when we are not looking hard at our costs," said
While HP is best known as a company that specializes in desktops, notebooks,
printing and other hardware, Hurd
did use the quarterly earnings result to emphasize the company's push into IT
services, especially after the EDS acquisition
. In its fourth-quarter
results, HP reported that revenue from its IT services division increased 99
percent to $8.6 billion. That number included $3.9 billion in revenue from EDS.