*NEWS*HP SALES HIT SEVEN-YEAR HIGH
*NEWS*HP SALES HIT SEVEN-YEAR HIGH
2007-08-17 at 8:08:00 am #18523
HP sales hit seven-year high
Share price rises two per cent in response to latest financial results
Aug 2007 HP achieved a 29 per cent leap in PC sales in the third quarter, providing the company with its strongest financial results in seven years.Total revenue at HP grew 16 per cent to $25.4bn (£12.8bn), while net profits rose to $1.8bn (£0.9bn), a rise of $0.4bn (£0.2bn) on the same period last year. Notebook sales were up 54 per cent, while revenue from desktops grew by 12 per cent.The strong results far exceeded Wall Street estimates. Yesterday the company’s share value rose two per cent to $47.02 in after-hours trading.HP chief executive Mark Hurd said the results reflected growth in the company’s key business areas and an increased demand for HP products.’We are continuing to become a more efficient organisation,’ said Hurd.
Supplies Revenue Up 9 Percent as HP Reports 3Q Results
August 2007 Net revenue of $25.4 billion, up $3.5 billion year over year, or 16% — GAAP operating profit of $2.1 billion; $0.66 earnings per share, up from $0.48 in the prior-year period — Non-GAAP operating profit of $2.3 billion; $0.71 earnings per share, up from $0.52 in the prior-year period.HP announced financial results for its third fiscal quarter ended July 31, 2007, with net revenue of $25.4 billion, representing growth of 16% year over year, or 12% when adjusted for the effects of currency.GAAP operating profit was $2.1 billion and GAAP diluted earnings per share (EPS) was $0.66, up from $0.48 in the prior-year period. Non-GAAP operating profit was $2.3 billion, with non-GAAP diluted EPS of $0.71 up from $0.52 in the prior-year period. Non-GAAP financial information excludes $134 million of adjustments on an after-tax basis, or $0.05 per diluted share, related primarily to amortization of purchased intangibles. GAAP and non-GAAP financial information include all stock-based compensation expense in both current and prior-year periods.”HP’s latest results demonstrate continued strength across each of our key businesses and geographies with our best revenue growth since 2000,” said Mark Hurd, HP chairman and chief executive officer. “We are executing increasingly well in creating demand for our innovative products and services, and we are continuing to become a more efficient organization.”
Information about HP’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below.
During the quarter, on a year-over-year basis, revenue in the Americas grew 14% to $11.1 billion, revenue in Europe, the Middle East and Africa grew 16% to $9.7 billion, and revenue in Asia Pacific grew 22% to $4.6 billion. When adjusted for the effects of currency, revenue in the Americas grew 13%, revenue in Europe, the Middle East and Africa grew 9%, and revenue in Asia Pacific grew 18%. Revenue from outside of the United States was 65%, with revenue in the BRIC countries (Brazil, Russia, India and China) growing 35% over the prior year in the third quarter and now accounting for more than 8% of revenue.
Personal Systems Group
Personal Systems Group (PSG) revenue grew 29% year over year to $8.9 billion, with unit shipments up 33% on a year-over-year basis. These results bring PSG’s year-to-date revenue growth to nearly $5 billion. Notebook revenue grew 54% over the prior-year period, while desktop revenue grew 12%. Commercial client revenue grew 19% year-over-year, while Consumer client revenue increased 46%. Operating profit was $519 million, or 5.8% of revenue, up from $275 million, or 4.0% of revenue, in the prior-year period.
Imaging and Printing Group
Imaging and Printing Group (IPG) revenue grew 8% year over year to $6.8 billion. On a year-over-year basis, supplies revenue grew 9%, commercial hardware revenue grew 6% and consumer hardware revenue grew 10%. Printer unit shipments increased 10% year over year, with consumer printer hardware units up 8% and commercial printer hardware units up 17%. Momentum in key growth initiatives continued, with printer-based multi-function devices up 76%. Operating profit was $981 million, or 14.5% of revenue, up from $884 million, or 14.2% of revenue, in the prior-year period.
Enterprise Storage and Servers
Enterprise Storage and Servers (ESS) reported revenue of $4.5 billion, up 10% over the prior-year period. On a year-over-year basis, industry-standard server revenue increased 16%, with x86 blade revenue up 81%. Storage revenue grew 6%, with revenue growth of 7% in external disk storage, including 14% in the midrange EVA line, and partially offset by a decline in the tape business. Business critical systems revenue declined 3%, with Integrity systems growth of 71% offset by declines in PA-RISC and Alpha. Operating profit was $464 million, or 10.2% of revenue, up from $296 million, or 7.2% of revenue, in the prior-year period.
HP Services (HPS) revenue increased 8% year over year to $4.2 billion. Revenue in Technology Services grew 5% over the prior-year period, while Consulting and Integration revenue rose 11%, and Outsourcing Services revenue rose 11%. Operating profit was $430 million, or 10.3% of revenue, up from $364 million, or 9.4% of revenue, in the prior-year period.
HP Software revenue grew 74% over the prior-year period to $554 million, led by strong growth from the businesses acquired in HP’s purchase of Mercury Interactive. On a year-over-year basis, HP OpenView grew 14% excluding Mercury. Operating profit was $81 million, or 14.6% of revenue, up from $13 million, or 4.1% of revenue, in the prior-year period.
HP Financial Services (HPFS) reported revenue of $582 million, an increase of 12% year over year. Financing volume and net portfolio assets increased 7% and 8%, respectively, over the prior-year period. Operating margin was 6.7% of revenue, comparable to the same period last year.
HP generated $1.9 billion in cash flow from operations. Inventory ended the quarter at $8.0 billion, up $728 million sequentially and up $542 million year over year. Accounts receivable increased $268 million sequentially and increased $2.2 billion over the prior-year period to $11.8 billion. Accounts payable increased $168 million sequentially and $978 million over the prior-year period to $11.7 billion. HP’s dividend payment of $0.08 per share in the second quarter resulted in cash usage of $209 million. HP utilized $2.5 billion of cash during the third quarter to repurchase approximately 55 million shares of common stock from the open market. HP exited the quarter with $12.5 billion in gross cash, which includes cash and cash equivalents of $12.5 billion, short-term investments of $40 million, and certain long-term investments of $23 million.