HP boosts 2010 Q1 earnings 25 percent
February 17, 2010
But Integrity unit's numbers decline vs. 2009
HP rolled out financial numbers for its 2010 first quarter today, happy overall news of an upward jolt for sales and profits. The Enterprise Storage and Servers (ESS) unit, home of the HP 3000 migration target systems, notched an 11 percent gain in sales. HP even raised its estimates for total 2010 sales and profits.
Unfortunately, the ESS increases arrived entirely from sales of HP's Industry Standard servers, those powered by the Intel Xeon-Nehalem chips and largely running Windows and Linux. The Business Critical Server group clocked another declining quarter with a 22 percent sales drop off 2009's Q1. Even though the ESS blade systems rose by 24 percent, the BCS figures, which include sales of HP's Integrity servers running HP-UX, can't even claim a drop because of the economy's free-fall. The 22 percent drop is compared to sales of November through January of 2009, a dark period for HP systems revenues.
Overall for HP, the news was improved on most other product line fronts. Imaging and Printing saw a slight sales increase, while Personal Systems rose a healthy 20 percent, lifted by a 26 percent increase in PC shipments. Services weathered a virtually flat quarter, as the EDS balloon finally stopped rising off 2009 levels. Software had a flat quarter as well, but HP's lending operations increased revenues by 13 percent.
ESS reported total revenue of $4.4 billion, about 14 percent of HP's total sales for the quarter. Storage revenue declined 3 percent with the midrange EVA product line down 5 percent. HP's juggernaut of cost cuts ensured the ESS operating profit of $552 million, or 12.6 percent of revenue, up from $406 million, or 10.3 percent of revenue, in the 2009 Q1.
HP's CFO Cathy Lesjak called the report a result of "solid performance across the businesses," despite the declines at BCS -- because the ESS unit as a whole posted increased results.
More information on HP's quarterly earnings, including additional financial analysis and an earnings overview presentation in PDF format, is available on HP's Investor Relations Web site at www.hp.com/investor/home.