HP Touts PC Groups Innovation

HP's Personal Systems Group generated an operating profit of $33M for 1Q, compared with a $68M loss in 4Q.

Coming off of its first profitable quarter in years, executives heading up Hewlett-Packard Co.s Personal Systems Group touted several products introduced over the past three months as examples of how innovation will continue to drive the company forward.

In a conference call with analysts and reporters on Friday, Duane Zitzner, executive vice president of the Palo Alto, Calif., companys unit—which includes commercial and consumer PCs, workstations and handheld devices—said it was such innovation that differentiates HP from Dell Computer Corp, its key competitor.

"Innovation and invention is a key aspect in our strategy," Zitzner said. "Its all about … ensuring that we have useful innovations for our customers."

In the first quarter, PSG generated an operating profit of $33 million, compared with a $68 million loss in the fourth quarter. Revenue also was up 2 percent from the previous quarter, to $5.1 billion, according to the company.

Zitzner and other HP officials pointed to new products that were rolled out between November and January, including two new HP iPAQ Pocket PCs, a thin one—the h1910—aimed at the consumer space and the h5450, which is targeted at enterprises and includes integrated wireless LAN access via 802.11b, Bluetooth capabilities and biometrics security features. They also pointed to the HP Compaq Tablet PC, launched in the United States in November and currently being rolled out in Europe.

The executives also seemed to dismiss suggestions that much of the units profitability simply was fueled primarily by consumer purchases of such products as the Media Center PC during the holiday season. Enterprises—whose buying seasons are still ahead—are responding well to such products as the Compaq Tablet PC and other innovations, such as a complete refresh of the workstation line and the shipping of the Compaq Evo Mobile Workstation N800w, the said.

"It combines workstation performance with the freedom of mobility," Zitzner said.

However, he declined to give any forward-looking guidance for the current quarter, other than to say that HP should be able to compete with Dell, of Round Rock, Texas, on pricing and still keep its profit margins up.

Zitzner also deflected a question about whether the way expenses were allocated contributed to PSGs strong quarter.

"We made money no matter how you count it, so that area can be laid to rest," he said.

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