Earning a profit is the first item in the vaunted HP Way list of goals. Hewlett-Packard met the goal in its most recent quarter — $2 billion worth — by relying on the surge in business outside the US.
A fiscal 2008 Q3 report shows the company increased its profits by 14 percent over last year's Q3, and Hewlett Packard increased its sales by 10 percent to more than $28 billion in the quarter. But analysts took note not of large servers or building blade business, but the 20 increase in unit shipments of PCs. Printers, meanwhile, have seen their growth in earnings and sales slow.
The report's details off the HP Investor Relations Web site show a company earning in every sector, by varying degrees. The Business Critical Servers group, home of some replacement solutions HP offers to migrating 3000 sites, posted another quarter of growth, still trailing the Industry Standard Server business that doesn't rely on the HP's Integrity servers running Itanium chips.
HP told analysts in today's call that BCS revenue was up just 2 percent year over year; Integrity revenue rose 18 percent from last year's Q3 and now makes up 78 percent of BCS revenue. HP-UX sites are making transitions away from PA-RISC servers to aid in this Integrity growth. Existing HP enterprise customers, such as the HP 3000 migrators, are a big part of why Integrity sales are increasing.
Many HP 3000 customers won't be moving to the Integrity line of servers, choosing to advance to Intel-based Industry Standard Servers such as the Proliant line. A Windows installation might not be the best long term choice to replace an HP 3000, given the state of Microsoft's innovation and the environment's enterprise capabilities, according to one leading 3000 migration company.
But 3000 sites are investing in such solutions to help lift those ISS numbers. New form factors are also contributing to the boost. HP said that sales of HP's blade servers — really just a new way to employ chassis for compact servers — grew 66 percent over the same period's sales last year.
"Customers are increasingly implementing HP's blade system to expand their IT infrastructure," said Cathie Lesjak, Hewlett-Packard CFO, "and this quarter we shipped our millionth blade."
Business was buoyed by the sales outside of the Americas during the period. Americas revenue growth came in at 5 percent compared to last year's Q3; growth in Europe, Asia Pacific and elsewhere increased 15 percent over the 2007 quarter.
HP Services, the last group in HP with any plan or authority to determine HP's 3000's end-game through 2010, enjoyed HP Services had a strong quarter with revenue growth of 14% over the prior year period. We "top-line strength in every business," Hurd said, "with technology services and consulting and integration revenue up 13 percent year-over-year and outsourcing revenue up 18 percent."
The quarterly report, which beat analyst estimates for revenues and earnings, might be the last one to show HP as a company grounded by its computer and print solutions. The $13.25 billion EDS acquisition is in play, and is expected to close by the end of this month, but it wasn't a part of the report. Once EDS joins the HP operations, the company will report on the work of an extra 130,000 employees and $44 billion in sales. This time around, HP Services recorded $4.8 billion in sales and $548 million in operating profits.
EDS will bring a wide range of services into HP's operations, ranging from the operation and maintenance of servers including HP 3000s to manning help desks. The company has mobilized a wave of its staff equal to the effort in acquiring Compaq in 2002.
"The [planning] is going well," Hurd said, "and we are confident in the benefits of this business combination will bring to customers, partners and to shareholders. We have over 500 HP and EDS people dedicated full-time to the integration team."