HP News Desk
Boy, Is HP Glad It Bought EDS
HP still claims gains in market share
By: Maureen O'Gara
Aug. 19, 2009 12:00 AM
Business is stabilizing according to HP CEO Mark Hurd, who's expecting a spike as the economy comes back. He's also not ready to "call it a turn."
Although PCs, servers, software, printers and storage were all down roughly 20%, the bellwether still beat estimates Tuesday when it reported its fiscal third quarter, which closed on July 31.
It made 91 cents, up from 86 cents, on a non-GAAP basis, or 67 cents net, off 19% to $1.64 billion on net revenues down 2% year-over-year and up 4% in constant currency at $27.5 billion.
Wall Street figured it would do 90 cents on $27.25 billion according to First Call.
HP expects revenue this quarter to be up ~8% sequentially to $29.7 billion returning a better-than-expected non-GAAP EPS of $1.12.
It's also maintaining its full-year guidance although it thinks EMEA, the problem geography, isn't going to come back in Q4.
EMEA was down 12% in HP's Q3 while the Americas were up 8% and Asia-Pacific up 4%. Revenues from the BRIC countries were down 6%. HP gets 62% of its revenues from outside the US.
CFO Cathie Lesjak attributed Q3 performance to record profit in services of $1.3 billion, double-digit revenue growth in China and solid cash flow from operations of $3.9 billion, up 15% year-over-year.
Service is the new king at HP, the old printer company.
HP's service revenues were up 93% to $8.5 billion, close to a third of total revenues, largely due to EDS, and it's still wringing out the synergies of the acquisition.
HP sold 2% more PCs in the July quarter but sales dropped 18% to $8.4 billion and profits were off 34%.
Notebook revenue was down 10% and desktop 26%. Consumer sales were down 13%, corporate 22%.
Printer revenue dropped 20% to $5.7 billion with supplies off 13%; software revenue was off 22% to $847 million but software earnings were up 13%; and enterprise servers and storage collectively fell 23% to $3.7 billion.
Industry standard server revenue was off 21%; business-critical servers 30%; mid-range servers 23%; and storage off 21%. Even blades were hit, down 14%.
HP still claims gains in market share.
During the conference call Hurd said it's currently "an important time in the market," because customers are planning their 2010 budgets and will have to choose how to spend their money given their aging infrastructures and deferred innovation. He mused over the fact that non-HP equipment will come up for bid.
HP has shed 16,000 jobs.
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