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 user 2005-11-21 at 10:30:00 am Views: 70
  • #13304

    HP Releases Q4 Results – Stock Price Rises
    4th Quarter Beats Earnings Estimates; Company Announces Additional Job
    Cuts and Special Charges Reduce Earnings to $416 Million, Down from
    $1.1 Billion in 2004

    Imaging and Printing HP’s strongest business segment, reporting revenue
    of $6.8 billion, up 4 percent over the same period in 2004
    • Net revenue of $22.9 billion, up 7% year-over-year
    • Non-GAAP operating profit of $1.7 billion, $0.51 earnings per share
    • GAAP operating profit of $232 million, $0.14 earnings per share
    • Cash flow from operations of $1.9 billion

    ALTO, CA, Nov. 2005 – HP : today reported financial results for its
    fourth fiscal quarter ended Oct. 31, 2005, showing net revenue
    increased 7% year-over-year to $22.9 billion. Non-GAAP(1) operating
    profit was $1.7 billion, with non-GAAP diluted earnings per share (EPS)
    of $0.51, up from $0.41 in the prior-year period.
    Non-GAAP financial
    information for the fourth quarter excludes $1.1 billion of
    adjustments(1) on an after-tax basis, or $0.37 per diluted share,
    related primarily to restructuring-related costs and amortization of
    purchased intangibles, offset by a pension curtailment credit. GAAP
    operating profit was $232 million and GAAP diluted EPS was $0.14 per
    share, down from $0.37 in the prior-year period.
    Strong, Balanced Quarter
    delivered another strong quarterly performance, with balanced revenue
    growth, good cost discipline, improved margins in key businesses and
    strong cash flow,” said Mark Hurd, HP chief executive officer and
    president. “We are pleased with our progress to date, but there is more
    work ahead of us.”
    During the quarter, on a year-over-year basis,
    revenue in the Americas grew 5% to $10.0 billion, Europe, the Middle
    East and Africa grew 8% to $9.1 billion, and Asia Pacific grew 12% to
    $3.8 billion. On a consolidated basis, when adjusted for the effects of
    currency, fourth quarter revenue grew 6% year-over-year.
    Personal Systems Group
    Systems Group (PSG) revenue grew 9% year-over-year to $7.1 billion,
    with unit shipments up 13%. On a year-over-year basis, desktop revenue
    increased 1% and notebook revenue grew 23%. Revenue for commercial
    clients, which includes workstations, grew 8% over the prior-year
    period, while revenue in consumer clients grew 14%. PSG reported an
    operating profit of $200 million, or 2.8% of revenue, up from a profit
    of $77 million, or 1.2% of revenue, in the prior-year period.
    Imaging and Printing Group
    and Printing Group (IPG) posted quarterly revenue of $6.8 billion, up
    4% year-over-year. On a year-over-year basis, consumer hardware revenue
    decreased 4%, with printer unit shipments up 6%. Commercial hardware
    revenue grew 4% over the prior-year period, with printer unit shipments
    up 16%. Color laser unit shipments increased 41% year-over-year, and
    enterprise multifunction printer shipments increased 83%, reflecting
    continued momentum in key growth initiatives. Supplies revenue grew 7%.
    Operating profit was $896 million, or 13.2% of revenue, down from a
    profit of $1.1 billion, or 16.6% of revenue, in the prior-year period.
    Enterprise Storage and Servers
    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 12%, networked storage revenue grew 17% and
    business-critical systems revenue declined 1%. ESS reported an
    operating profit of $405 million, or 9.1% of revenue, up from a profit
    of $100 million, or 2.5% of revenue, in the prior-year period. HP
    HP Services (HPS) revenue grew 6% year-over-year to $3.9
    billion. On a year-over-year basis, Managed Services revenue grew 9%,
    Technology Services grew 4% and Consulting and Integration grew 11%.
    Operating profit was $322 million, or 8.3% of revenue, down from a
    profit of $375 million, or 10.2% of revenue, in the prior-year period.
    reported quarterly revenue of $311 million, an increase of 11%
    year-over-year, with revenue in HP OpenView and HP OpenCall increasing
    16% and 3%, respectively. Software reported an operating profit of $27
    million, or 8.7% of revenue, compared with a loss of $7 million in the
    prior-year period.
    Financial Services
    HP Financial Services
    (HPFS) reported revenue of $514 million, an increase of 3%
    year-over-year. Finance volume and net portfolio assets declined 1% and
    3% respectively. Operating profit was $52 million, or 10.1% of revenue,
    up from a profit of $19 million, or 3.8% of revenue, in the prior-year
    Asset Management
    Inventory ended the quarter at $6.9
    billion, up $233 million sequentially and down $194 million
    year-over-year. Accounts receivable increased $1.1 billion sequentially
    and decreased $323 million over the prior-year period to $9.9 billion.
    HP’s dividend payment of $0.08 per share in the fourth quarter resulted
    in cash usage of $229 million. In addition, HP utilized $1.4 billion of
    cash during the fourth quarter to repurchase stock. HP exited the
    quarter with $13.9 billion in gross cash, which includes cash and cash
    equivalents of $13.9 billion and short- and certain long-term
    investments of $36 million.
    First quarter FY06 non-GAAP
    earnings per share is expected to be in the range of $0.46 to $0.48,
    excluding $0.03 to $0.04 of stock-based compensation expense, or $0.42
    to $0.44 including stock-based compensation expense.
    Full year FY06
    non-GAAP earnings per share is expected to be in the range of $1.88 to
    $1.95, excluding approximately $0.13 of stock-based compensation
    expense, or $1.75 to $1.82 including stock-based compensation expense.
    earnings per share estimates for Q1 FY06 and full year FY06 exclude
    after-tax costs of approximately $0.04 per share and $0.14 per share
    respectively, primarily related to the amortization of purchased
    intangible assets.

    HP to post stronger quarter

    NOVEMBER  2005
    cuts and steady growth in its printer, server and personal computer
    businesses will drive a rise in Hewlett-Packard quarterly profit when
    the company reports on Thursday, analysts said.
    With results
    improving, the No.2 computer is likely to abandon any thoughts of
    writing down billions of dollars of goodwill, an accounting move that
    would admit the failure of the 2002 acquisition of Compaq but also give
    new chief executive Mark Hurd a fresh start.
    “HP is going to look
    much better coming out of this quarter than Dell and Lexmark,” said
    Brent Bracelin, an analyst at Pacific Crest Securities. Dell, the No.1
    PC maker, and printer maker Lexmark both had disappointing quarters, he
    US accounting rules require companies annually to test whether
    goodwill – an estimation of intangible assets such as the value of a
    brand name or high employee morale and undefined merger-related
    benefits – has been impaired.
    Since shortly after Mr Hurd’s arrival
    on April 1, analysts and investors have speculated that HP might choose
    to write off the goodwill related to the Compaq deal
    That would be a
    symbolic admission that the purchase did not yield the value that had
    been promised and mark a clear end to the era of previous CEO Carly
    But HP has been steadily improving its results, and its
    long-struggling PC business had already started to turn the corner
    before Mr Hurd took the helm. HP last quarter posted results that
    topped analyst expectations and issued a forecast for the current
    quarter that was ahead of then-average Wall Street forecasts.
    earnings are improving, a company is less likely to take a write-off,”
    said Cindy Shaw, an analyst at Moors & Cabot, adding that she had
    speculated HP might take the Compaq write-down when it last reported
    results in August.
    If HP were to write down the Compaq goodwill, it
    could raise red flags for investors, who are looking for predictable
    and sustained revenue and profit growth from HP.
    “If they do write
    it off, that might imply they are negative about future profitability,”
    Ms Shaw said. “To write it off would be contradictory.”
    Analysts on
    average expect HP’s per-share profit before items in the fourth quarter
    to rise 12 per cent to US46c and revenue is forecast to rise 6.4 per
    cent to $US22.8 billion ($31.2 billion), according to Reuters Estimates.
    each of the first three quarters of its fiscal year 2005, HP has topped
    the average Wall Street per-share profit estimate. Revenue eclipsed the
    consensus estimate in two of the three quarters.