HP Reports Increases in Fourth Quarter ResultsNovember 22, 2010
HP Software revenue increased roughly 1 percent to $974 million in the fourth quarter. Business Technology Optimization revenue increased 4 percent, and Other Software revenue decreased 6 percent. Operating profit was $247 million, or 25.4 percent of revenue, up from $234 million, or 24.2 percent of revenue, in the prior-year period.
Personal Systems Group
Personal Systems Group (PSG) revenue increased 4 percent to $10.3 billion in the fourth quarter. HP maintained the leading market share position in PCs worldwide with a 2 percent increase in unit shipments. Notebook revenue for the quarter was down 3 percent from the prior year period, while Desktop revenue increased 13 percent. Commercial client revenue was up 20 percent, while Consumer client revenue declined 10 percent. Operating profit improved to $568 million, or 5.5 percent of revenue, up from $460 million, or 4.7 percent of revenue, in the prior-year period.
Imaging and Printing Group
Imaging and Printing Group (IPG) revenue increased 8 percent to $7.0 billion in the fourth quarter. Supplies revenue was up 6 percent, while commercial hardware revenue and consumer hardware revenue were up 22 percent and down 2 percent, respectively. Printer unit shipments increased 14 percent, with commercial printer hardware units up 43 percent and consumer printer hardware units up 7 percent. Operating profit was $1.2 billion, or 17.4 percent of revenue, versus $1.2 billion, or 18.1 percent of revenue, in the prior-year period.
HP Networking revenue increased 227 percent overall in the fourth quarter including the impact of the 3Com acquisition, which was completed last April. ProCurve revenue grew 50 percent over the prior-year period.
HP Financial Services
HP Financial Services (HPFS) revenue increased 11 percent to $809 million in the fourth quarter. Financing volume increased 11 percent, and net portfolio assets increased 14 percent. Operating profit was $73 million, up from $66 million in the prior-year period.
HP generated $3.2 billion in cash flow from operations for the fourth quarter. Inventory ended the quarter at $6.5 billion, with days of inventory flat year over year at 23 days. Accounts receivable of $18.5 billion was up 2 days year over year. Accounts payable ended the quarter at $14.4 billion, down 5 days from the prior-year period. HP's dividend payment of $0.08 per share in the fourth quarter resulted in cash usage of $181 million. HP also utilized $4.0 billion of cash during the quarter to repurchase approximately 96 million shares of common stock in the open market. HP exited the quarter with $11.0 billion in gross cash.
For the first quarter of fiscal 2011, HP estimates revenue of approximately $32.8 billion to $33.0 billion, GAAP diluted EPS in the range of $1.06 to $1.08, and non-GAAP diluted EPS in the range of $1.28 to $1.30. First quarter fiscal 2011 GAAP and non-GAAP diluted EPS estimates include a one-time gain of approximately $0.04 per share primarily related to the disposition of real estate.
First quarter fiscal 2011 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.22 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges.
HP expects full year fiscal 2011 revenue in the range $132 billion to $133.5 billion, GAAP diluted EPS in the range of $4.42 to $4.52, and non-GAAP diluted EPS in the range of $5.16 to $5.26. GAAP and non-GAAP diluted EPS includes a one-time gain of approximately $0.04 per share primarily related to the disposition of real estate.
Full year fiscal 2011 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.74 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges.
More information on HP's quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP's Investor Relations website at www.hp.com/investor/home.
HP’s Q4 FY10 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2010q4webcast.
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Source: Financial release.