*NEWS*HP IMAGING REVENUE OF $6.8 BILLION
*NEWS*HP IMAGING REVENUE OF $6.8 BILLION
2005-11-21 at 10:30:00 am #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.
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
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
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
HP to post stronger quarter
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.
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.”
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.