Services delivered a solid quarter for HP, generating $8.9 billion in revenue. HP CEO Mark Hurd said the integration of EDS into the company was ahead of schedule, and that HP was able to cut 19,000 jobs in the wake of the EDS purchase in 2008, which helped save on the bottom line. Overall, HP generated $2.4 billion in profit on $30.8 billion in revenue.
Hewlett-Packard reported solid quarterly numbers on the strength of its
services business and it cost-control efforts, including the elimination of
19,000 jobs in the wake of merging EDS into
HP Nov. 23 said revenue for its fiscal year fourth-quarter 2009 came in at
$30.8 billion, down 8 percent over the same period last year, but up 12 percent
over the third quarter. Income was at $2.4 billion, a jump from $2.1 billion in
the fourth-quarter 2008.
In a conference call with analysts and reporters, Chairman and CEO
Mark Hurd said the economy continues to show signs of improvement, but that it
remains "challenging." However, "we do see encouraging signs of recovery," Hurd
Services was a focus of his presentation. HP bought EDS
for $13.9 billion in May 2008, and Hurd said the integration of the company was
ahead of schedule. In September, HP changed the name of its EDS
unit to HP
In the quarter, HP's services business generated $8.9 billion, up 8 percent
over the same period last year. Hurd said that with the integration within HP
and the shedding of costs, HP's Enterprise Services is " now a business
that can compete and win. We are well-positioned to grow."
Services is becoming an increasingly competitive field, with hardware makers
looking to diversify by moving away from low-margin products and expanding into
services. Dell bought
for $3.9 billion in September, and Xerox followed later in
the month with the $6.4 billion acquisition
of Affiliated Computer Services
HP, the world's top PC maker, saw shipments of its computers grow by 8
percent over the same quarter last year, but revenue drop 12 percent. Hurd said
HP was seeing an uptick in demand, both among consumers and enterprises. HP's
earnings release came hours after analyst firm Gartner said that the overall PC
market-led by the notebooks segment-was positioned
during the current quarter, though low prices will drive down
revenues. A key driver for demand will be Microsoft's new Windows 7 operating
Officials with Dell, the third largest global PC vendor, said Nov. 19 that
they're also expecting Windows 7 to drive
Its Enterprise Storage and Servers unit saw revenue drop 17 percent, with
storage revenue falling 20 percent, industry-standard server revenue dropping
10 percent and its high-end server business declining 33 percent.
HP's printer business saw revenue drop 15 percent to $6.5 billion, though
profits stayed steady at $1.2 billion.
Hurd said there were encouraging signs in the economy, including a solid
uptick in business in both the United States
and China, two
markets that combine to bring in about 40 percent of all HP revenues. Europe
is still a struggling market, he said.
The planned $2.7 billion acquisition
of networking equipment vendor 3Com
will help increase HP's reach in China,
as well as bolster HP's ProCurve networking business against Cisco Systems and
grow its networking security offerings.
HP expects to bring in between $29.6 billion and $29.9 billion in its fiscal
year 2010 first quarter, and between $118 billion and $119 billion for the
entire 2010 fiscal year.