HP Q4, FY static; 3000 replacement sales fall
December 1, 2014
Despite all of the challenges Hewlett-Packard faced over the past fiscal year, the company has reported sales and earnings that didn't fall much from FY 2013 levels. Falling sales of HP 3000 replacement systems remain on the balance sheet, however. Nothing has changed but the depth of the plunge.
Both the 2014 fiscal year and the Q4 numbers (click on graphics for details) reflected an ability to keep some declines off the HP financial report. The latest quarter improved on Q2 and Q3 results overall. HP reported a profit of $2.62 per share for 2014. That's nearly $5 billion in earnings company-wide.
If the company sticks to its plan, its total of $115 billion in 2014 sales, only down 1 percent from last year, covers the penultimate period HP reports as a full company. By the end of FY 2015, the corporation will separate its businesses and spin off HP, Inc. for consumer and PC products. Hewlett-Packard will remain to sell servers and enterprise computing products and services. Analysts expect the companies to be of equal size.
The total of HP's Business Critical Systems revenues took another hit in the fourth quarter, dropping almost 30 percent from Q4 of 2013. Double-digit percentage drops in BCS sales are commonplace by now. The unit produces the HP-UX systems HP once designated as replacements for the HP 3000. Intel-based systems, contained in the Industry Standard Servers operations, also saw their sales decline slightly. Networking revenues were slightly higher for the quarter.
The company's CEO was thrilled about the overall picture for the full company, calling it a sustained turnaround.
"I'm excited to say that HP's turnaround continues on track," said Meg Whitman. "In FY14, we stabilized our revenue trajectory, strengthened our operations, showed strong financial discipline, and once again made innovation the cornerstone of our company. Our product roadmaps are the best they've been in years and our partners and customers believe in us. There's still a lot left to do, but our efforts to date, combined with the separation we announced in October, sets the stage for accelerated progress in FY15 and beyond."
The BCS numbers for the full year showed a 22 percent sales decline, a figure that reflects a total of perhaps $200 million in lost revenues. HP doesn't report individual segment sales totals from its Enterprise Group. But BCS operations accounted for about 3 percent of the Enterprise group's $27.8 billion of activity. BCS did avoid a quarterly revenue decline once during 2014. This latest period countered with the largest quarter-over-quarter sales dive for BCS, up to now.
Even though four of the five HP segments reported revenue declines -- and the fifth, Printing and Personal systems, was flat -- the company continues to post profits. The Enterprise Group managed to return the largest operating profit for Q4 of 2014, even while its sales declined. Profitability from these Enterprise products and services will buoy up the forthcoming HP Enterprise corporation. Only HP Printing, the keystone of the new HP Inc., is more profitable per dollar of revenue.
BCS 3000 replacements won't be providing as much profit during the forthcoming year. But HP predicts that its total, company-wide operations for 2015's fiscal year will net $6 billion in profits. Those are numbers for the combined company -- one which, by this time next year, will operate as two entities.