HP Reports Revenue Growth, Raises Outlook
Hewlett-Packard continued the trend of positive tech financial news, with officials announcing quarterly revenue growth of 8 percent and increasing their outlook for the current quarter and for the fiscal year.
In a conference call with analysts and reporters Feb. 17, HP President and CEO Mark Hurd said the company's consumer business in such areas as laptops grew, continuing a trend that began in the second half of 2009. At the same time, he said, corporate spending is beginning to show signs of life, causing growth in HP's server business and some areas of its printer line.
In addition, Hurd said demand for storage products was high enough that it was difficult for HP to meet it all, something he said the company is working hard to correct.
Overall, Hurd said he was pleased with HP's position in the industry and believes the determining factor will be the recovery in the economy.
"If the market does better, then we'll do better," he said.
For its first fiscal quarter, HP netted $2.3 billion on revenue of $31.2 billion. During the same period the previous year, the company earned $1.9 billion on $28.8 billion of revenue.
In addition, Hurd said the company was raising its revenue projections for the second fiscal quarter to between $29.4 billion and $29.7 billion, and for the entire fiscal year to between $121.5 billion and $122.5 billion, up from previous estimates of $118 billion to $119 billion.
HP, the world's top PC vendor, saw a 26 percent jump in unit shipments for the quarter, and revenue grow 20 percent to $10.6 billion. The consumer client business grew 26 percent, while the commercial PC business increased 16 percent.
Hurd said consumer purchases of PCs continued to be strong. However, he echoed what officials with other tech vendors-such as Intel-have said: They expect corporations to dive into the refresh cycle in the second half of the year.
Driving that refresh cycle is not only the number of aging PCs, but also such new factors as Microsoft's Windows 7 operating system and a host of new processors from companies such as Intel and Advanced Micro Devices.
HP also saw strong growth in its x86 server business, with industry-standard systems revenue jumping 27 percent and blade server revenue going up 24 percent.
Again, Hurd said he anticipates that businesses, attracted to potential TCO savings to be gained from HP's portfolio of ProLiant G6 systems, will buy more new systems during 2010.
"We do see a pretty robust refresh cycle throughout the year," Hurd said.
However, revenues in HP's storage business declined 3 percent, and declined 22 percent in its high-end Business Critical Systems unit.
In its other businesses, HP saw a 4 percent revenue increase in printing and imaging and a 1 percent drop in services. The software business remained flat, at $878 million in revenue.
Hurd said HP's $2.7 billion deal to buy networking equipment maker 3Com is still on track to close in the second quarter of 2010. The European Commission approved the deal Feb. 12; U.S. regulators already had given the OK. There are a few smaller hurdles to clear, Hurd said.
HP is looking to 3Com to bolster its ProCurve networking business to help it better compete with Cisco Systems, not only in networking but also in the increasingly competitive space of converged data center solutions.
Hurd noted that since HP announced the deal in November, both HP ProCurve and 3Com have seen a bump in their businesses.
"We think the leveraging of the two [will create] a very powerful force in the industry," he said.