Even as HP saw quarterly revenue and earnings fall, HP CEO Mark Hurd said that business seems to be stabilizing, particularly in the United States. For example, while revenue in its PC business was down, unit shipments increased 2 percent. HP also gained share in PCs and servers. Hurd said he expects the rest of 2009 to mirror the first half, but that marked improvement will come in 2010.
Hewlett-Packard Chairman and CEO Mark
Hurd said the IT business climate is beginning to stabilize, though he stopped
short of calling it a recovery.
In a conference call Aug. 18 with analysts and journalists after the company
released its fiscal year third-quarter financial numbers, Hurd said HP
officials are beginning to see an uptick in business in the United
States, though Europe
is still a difficult market.
He also said he expects 2010 to be a better year than 2009, though HP will
have to get through the second half of this year before seeing a marked
improvement in business.
"We're encouraged by the stabilization we're seeing in the market, but not
to the point where we can call it a [turnaround]," Hurd said.
HP had a tough third quarter, with revenue falling 2 percent over last year,
to $27.5 billion, with earnings coming in at $1.6 billion, a 19 percent drop.
However, there were some hopeful signs. While the Personal Systems Group
revenues declined 18 percent, to $18.4 billion, the company also saw PC unit
shipments increase 2 percent. In addition, HP saw market share in both PCs and
industry-standard servers increase more than expected, according to Cathie
Lesjak, HP's chief financial officer.
Hurd credited much of the success in the industry-standard server space to
the company's launch of its ProLiant
, which are powered by Intel's new Xeon 5500 Series "Nehalem EP"
processors and Advanced Micro Devices' newest Opteron chips.
Hurd also said that the upcoming quarter was an important one for HP and its
competitors, as businesses begin putting together their budgets for the next
year. The economy is showing signs of improving, and businesses that have been
delaying IT purchases are now beginning to consider refreshing aging systems.
"I think what you've seen so far this year is what we'll see the rest of the
year," Hurd said, adding that next year will be when the industry sees real
HP is an important indicator of the overall health of the IT market because
it touches on many sectors. It's the top PC vendor in the world and, with its
acquisition last year of services vendor EDS,
is second to IBM as the No. 1 technology
It's the top printer company and is up there with IBM
in server sales, and it also sells storage devices and software.
HP's printer business took a hit, with revenue dropping 20 percent, to $5.7
billion. Hurd said part of the reason for the decline was the continued
realignment in channel inventory, though revenues in both commercial and
consumer printers also dropped. Printer units fell 23 percent.
HP also is aggressively pushing its ProCurve
, putting it in tighter competition with Cisco Systems
in that space.
Regarding EDS, Hurd said that a lot of
the success of the services unit was due to the acquisition. Services revenue
jumped 93 percent, to $8.5 billion. The integration of the massive services
company is going as planned, he said.
Part of that integration is the cutting of 24,700 jobs over three years
after the EDS purchase. Earlier this year,
HP also said it was cutting another 6,400 jobs.
In its fiscal fourth quarter, HP officials expect revenue to grow 8 percent
over the third quarter. For the full fiscal year 2009, Hurd and Lesjak said
they expect revenues to come in the midpoint of the prediction made in May, when
officials said they expected revenue for the year to decline 4 to 5 percent.