HP profit bolstered by servers and storage
Third-quarter revenue exceeds analyst expectations as profits from storage systems and servers grow and overseas sales soar.
Revenue for the period was $20.8 billion, with a net income of $73 million, or 3 cents per share.
Mark Hurd
CEO, HP
Excluding one-time items, the company reported net income of $1.2 billion, or 36 cents per share. That compares with revenue of $18.9 billion, or 24 cents per share, a year earlier.
Analysts expected HP to earn 31 cents per share, according to a survey by Thomson First Call.
The biggest charge was a $988 million hit related to the repatriation of $14.5 billion in cash from foreign earnings.
At the close of regular trading, HP shares were down 36 cents to $23.73. The earnings report was issued after the bell.
CEO Mark Hurd said he was pleased with the results considering the company balanced aggressive pricing competition with the announcement back in July that HP would eliminate 14,500 jobs in the future, or about 10 percent of the company's total work force.
Despite warnings from Dell and Gateway that PC sales were less than expected, Hurd dismissed concerns that growth in the PC industry is slowing.
"When you look at macro level demand from us, you get words like 'steady.' When you talk about specific areas, such as consumer versus business, or on a regional basis, you get different results," Hurd said.
HP also said revenue for its PC division grew 8 percent year-over-year to $6.4 billion, with unit shipments up 14 percent.
"HP appears to have escaped the weakness experienced by Dell in the consumer business," said Christopher Foster, an analyst with Technology Business Research, who noted that HP benefited from strong notebook sales.
Hurd said HP's Enterprise Storage and Servers unit performed very well. The division, which sells HP's Integrity, Non-Stop and ProLiant servers, reported revenue of $4 billion, which is 20 percent better than the division did at this time last year.
The company's bread-and-butter Imaging and Printing Group brought in $5.9 billion, or 5 percent more than it did last year.
"Dell is clearly pressuring the inkjet and multi-function businesses. HP is protecting its high margin supplies business by discounting hardware," Foster said.
On a regional basis, HP said its revenue in the Americas grew 8 percent to $9 billion. Europe, the Middle East and Africa grew 10 percent to $8.2 billion, and Asia-Pacific grew 15 percent to $3.5 billion. Taken together, HP's revenue in its various regions grew 7 percent over last year's results.
On a personal level, Hurd said he was pleased with his first official three months at his post and said his team is prepared for the next three months.