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HP's Hurd Pleased With Quarterly Progress

Sales grow 10%, but profits tumble during the fiscal third quarter.
Saying he was "pleased and encouraged" by the progress of Hewlett-Packard since taking over as chief executive and president in March, Mark Hurd said Tuesday that the company was able to meet all its key objectives in its recently completed fiscal third quarter.

For the quarter ended July 31, HP reported earnings of $73 million, or 3 cents per share, on revenue of $20.8 billion. While revenue was up 10% from the $18.9 billion reported in the same period one year ago, the third-quarter earnings represented a substantial drop from the earnings of $586 million, or 19 cents per share, reported for last year's third quarter.

"The objective is to build a strong and healthy HP for the long term while delivering on our short-term commitments at the same time," Hurd said during a conference call Tuesday.

"We have succeeded in doing two difficult things at once: We stayed focused on delivering a strong quarterly performance, and we launched a significant restructuring effort," he said. The quarterly results were the first since Hurd revealed in July HP's intention to reduce its workforce by 14,500 workers, or about 10%.

HP has been able to deliver strong cash flow, see "excellent" performance from its personal systems group, and achieve "steady progress" in its imaging and printing group, Hurd said. The personal-systems group revenue grew by 8% year over year to $6.4 billion, led by 21% growth in notebook computer sales. Overall, he described growth in the PC industry as "steady and stable."

The imaging and printing group had quarterly revenue of $5.9 billion, up 5% year over year. The enterprise storage and servers unit had revenue of $4.0 billion, up 20%. Services revenue was $3.8 billion, up 10%. Software revenue was $249 million, up 11%. And financial services had revenue of $489 million, which was flat.

Hurd said HP decided to exit the iPod business last year because it was an area "we weren't adding a lot of value. ... We couldn't see a grander road." He said there were no other businesses that had been identified to either spin-off or discontinue.