Infrastructure // PC & Servers
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11/24/2008
06:38 PM
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HP Laptops, Services Boost Quarterly Revenue

Dell, on the other hand, recently reported a 3% drop in revenue for the same period to $15.16 billion, while its profits fell 5% to $727 million.

As expected, Hewlett-Packard on Monday delivered strong fiscal fourth-quarter results, considering the economic downturn that has had a more serious impact on rival Dell.

As reported last week in preliminary results for the quarter ended Oct. 31, HP reported a 2% jump in revenue to $33.6 billion, excluding the acquisition of services company EDS and including currency adjustments. If EDS revenue is included, then sales were up 16% from the same period a year ago.

Net income rose about 4% to $2.7 billion, or 84 cents a share, as aggressive cost cutting gave a solid boost to the bottom line. "HP capped off a strong year by delivering another solid quarter led by strength in our services segment and disciplined expense management," Mark Hurd, HP's chairman and chief executive, said in a statement.

HP saw a 10% increase year over year in PC sales to $11.2 billion, with unit shipments up 19%. Revenue from notebooks, the fastest-growing segment of the market, rose 21%, while desktop revenue fell 2%. Business PC revenue grew by 7%, while consumer PC revenue rose by 15%.

Revenue from enterprise storage and servers fell 1% to $5.1 billion, while sales from HP's printer business declined 1% to $7.5 billion.

HP services revenue, excluding the EDS acquisition, grew by 10%. Separately, technology services and outsourcing services increased 10% and 15%, respectively.

"It's clear to me that HP has done a great job in managing their business, particularly their cost ahead of the worldwide market downturn that we're now seeing," IDC analyst Crawford Del Prete told InformationWeek.

Dell, on the other hand, reported last week a 3% drop in revenue for the same period to $15.16 billion, while profits fell 5% to $727 million. Dell beat analyst estimates for profits, but was below estimates for revenue, according to Reuters news agency.

Dell managed to avoid a more serious decline through a number of cost-cutting initiatives, including a reduction in 2,200 jobs since the previous quarter. Since the second quarter of last year, Dell has shed 11,600 employees, excluding acquisitions.

Dell, which lacks the product and services diversity of HP, has fewer options to avoid the impact of a slumping PC market in the current global economic downturn.

"Dell is a little more at the mercy of the market," Del Prete said. "There's less that Dell can cut than HP, so problems on the top line really show up well on the bottom line."

For the current first fiscal quarter of 2009, HP expects earnings from 80 cents to 82 cents a share on revenue from $32 billion to $32.5 billion.

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