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4 HP Q1 revenue up 11 percent
HP reported a bang up quarter today, with sales of $25.1 billion, or some $800 million ahead of forecasts.
For
its first fiscal quarter of 2007, HP reported net revenue of $25.1
billion, a jump of 11 percent year-over-year, or seven percent when
adjusted for the effects of currency. Net income of $1.55 billion
compares favorably with the $1.23 billion reported over the same
quarter last year. For the second quarter, HP CEO Mark Hurd is
projecting $24.5 billion in revenue, higher than earlier estimates of
$24.1 billion.Gartner analyst Martin Reynolds said by his estimation,
this quarter’s results represent the first time HP’s revenue exceeded
that of HP and Compaq combined before the two merged in 2002. He called
it a sign of the controversial merger’s success. While its PC desktop
revenue was down one percent in the quarter, HP reported a big jump in
its notebook business, up 40 percent over the same period a year ago.In
a conference call with analysts, CEO Hurd repeatedly praised his
company’s “solid” results, while also emphasizing more work remained.
He also addressed some of the computer and printer giant’s
challenges.”We know we have a lot of work ahead of us. We are
transforming, we’re not transformed,” said Hurd. HP needs to continue
investing in new technology and do a better job in inventory
management, Hurd added.One area of work is in enterprise sales. Hurd
said high-end server sales were the only “blemish” on HP’s quarterly
results. Storage sales were also down, but Hurd said the biggest drop
was in older tape storage, which was offset by stronger sales of its
midrange Enterprise Virtual Array storage systems.Reynolds told
internetnews.com that although high end, so-called business critical
systems, aren’t a fast growing market, they’re a large and important
one. “HP’s Itanium servers are a pretty good product that should be
doing better,” said Reynolds. He noted that HP faces strong competition
from IBM’s Power line and a resurgent Sun Microsystems .HP’s bread and
butter printer business continues to do well. Revenue in HP’s imaging
and printing business increased seven percent to $7.0 billion for the
quarter. Hurd was asked about Kodak’s (Quote) plans to release higher
priced inkjet printers with less costly ink cartridges, next month.Hurd
laughed at the idea of higher prices in the cutthroat printer market.
“It’s an interesting concept,” said Hurd. “We hope hardware prices go
up, we’d be glad to participate in that.”But Reynolds said any price
war over ink cartridges would hurt one of HP’s main profit centers. “HP
doesn’t want a price war on ink because that becomes a profit war,”
said Reynolds. “So far the cartridge re-fillers have had an impact, but
it hasn’t been devastating.”Despite its success, HP is also doing a
little proactive people management. Hurd announced the company is
freezing further contributions to its defined benefit plan for U.S.
employees at the end of this year.Starting in 2008, HP said it will
increase the employer match of its 401k program from the current four
percent up to six percent. The company is also offering an early
retirement package it hopes will lop about 3,000 positions off the
payroll.Successful or not, “freezing benefits and reducing pension
plans is just part of the modern world,” said Reynolds. “You used to be
able to get a job for life, but those days have passed us. HP is just
bringing its costs in line and consistent with the rest of the
industry.”
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