November 20, 2007
HP revenue growth shatters quarterly marks
HP on Nov. 19 posted results from its latest quarter which broke its single-quarter revenue numbers by nearly 30 percent. HP promoted the push as led by the software gains in the company's operations, according to CEO Mark Hurd. A $28 billion finish in the final 90 days of sales for the the year gave HP a total of $105 billion for its annual sales. Q4 netted $2.6 billion in profits. Year-long profits for 2007 were $7.2 billion.
“Strong performance across our businesses was highlighted by sharp improvement in our software segment,” said Hurd. Overall, he noted, “We have added over $12 billion of new revenue this year. While we still have more work to do, HP is well positioned to make further progress in the marketplace.”
In comparison, Apple's last four quarters netted $3.5 billion in profit on one fourth of HP's revenues. IBM has posted $12 billion in profit over its last four quarters on $118 billion in revenues.
HP also announced that its board approved the repurchase of $8 billion in its common stock. This would represent about six percent of all outstanding HP shares. HP started the trading day at a price of $50.87 per share, about three dollars off its 52-week high.
Highlights from the report, released after the markets closed, showed that the Enterprise Systems and Storage Group, (ESS), the parent group where the HP 3000 alternative systems such as Integrity and NonStop servers are created and sold, posted a 10 percent revenue growth over last year's Q4.
The Business Critical Systems group, heartland of the Integrity alternative, increased revenues by 5 percent in the final period of fiscal 2007. Integrity sales grew 59 percent in the quarter, but HP lost ground in the PA-RISC and Alpha sectors, places where the vendor has already promised an end to the server lines built upon those chipsets.
BCS profits rose over last year's Q4 to $693 million, 13.5 percent of revenues. But industry-standard server sales dominated the ESS increases for the quarter. Overall these Intel-based systems sold 14 percent more than in last year's Q4, sparked by x86 (Xeon) blade revenue increases of 78 percent.
However, BCS numbers paled when compared to the HP Services operations, where the vast majority of HP 3000 customers still do business with Hewlett-Packard. HP Services grew to $16.4 billion on the year, an uptick from the 2006 results of $15,6 billion. Services covers nearly every HP product line, but the BCS yearly revenues fell for 2007, down from $3.6 billion to $3.5 billion.
The HP Software operations, a nexus of acquistions over the prior year and half, doubled its revenues over the prior-year period to $698 million, led by growth from the businesses acquired in HP’s purchase of Mercury Interactive. HP said that on a year-over-year basis, HP OpenView grew 24 percent excluding Mercury. Operating profit was $177 million, or 25.4 percent of revenues, up from $60 million, or 17.2 percent of revenue, in the prior-year period.
Printers and Imaging surrendered its largest share ranking among HP's businesses, with HP's Personal Systems Group taking the lead in revenues. Operating profits in the printer group were flat compared to last year's Q4, but still contributed a hearty $1.1 billion to the quarter's profits, about 40 percent of the quarterly total.
Some reports showed that HP increased its sales of PCs in China during the period to lift up the Personal Systems Group numbers.
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