HP Reports Small Revenue Gain, Initiates Company TransformationAugust 19, 2011
For the quarter, net revenue of $31.2 billion was up 1 percent from the prior-year period as reported and down 2 percent when adjusted for the effects of currency.
GAAP diluted earnings per share (EPS) was $0.93, up 24 percent from $0.75 in the prior-year period. Non-GAAP diluted EPS was $1.10, up 2 percent from $1.08 in the prior-year period. Non-GAAP financial information excludes after-tax costs of approximately $0.17 per share and $0.33 per share in the third quarter of fiscal 2011 and 2010, respectively, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges. Information about HP’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below.
“Our outlook reflects the challenges that we face across our businesses,” said Cathie Lesjak, HP executive vice president and chief financial officer. “Dealing with these challenges will take time, but HP will navigate through the transformation to become a more focused, streamlined company.”
Trends and regional performance
HP’s Commercial businesses remain healthy with 5 percent revenue growth year over year. HP’s Consumer businesses, within PSG and IPG, were collectively down 15 percent year over year.
Third quarter revenue was flat year over year in the Americas as well as in Europe, the Middle East and Africa at $14.1 billion and $11.0 billion, respectively. Revenue in Asia Pacific was $6.1 billion, representing a 9 percent increase year over year. When adjusted for the effects of currency, revenue was down 2 percent in the Americas, down 5 percent in Europe, the Middle East and Africa and up 1 percent in Asia Pacific.
Revenue from outside of the United States in the third quarter accounted for 65 percent of total HP revenue. BRIC countries (Brazil, Russia, India and China) generated revenue of $3.7 billion, up 12 percent over the year-ago period, accounting for 12 percent of total HP revenue.
Business group highlights
• Imaging and Printing Group (IPG) revenue declined 1 percent year over year, with a 14.7 percent operating margin. Commercial revenue was down 7 percent year over year ,with commercial printer hardware units up 1 percent. Consumer printer hardware revenue was up 1 percent year over year on 7 percent unit growth. IPG continued to drive innovation and momentum with digital presses and web-connected printers.
• Personal Systems Group (PSG) revenue declined 3 percent year over year with a 5.9 percent operating margin. PSG remains the PC market leader in terms of units, revenue and profit share. Commercial Client revenue grew 9 percent and Consumer Client revenue declined 17 percent.
• Financial Services revenue grew 22 percent year over year with a 9.4 percent operating margin. Financial Services continued to see its strong performance driven by both double-digit growth in lease volume and a healthy improvement in portfolio assets.
For the fourth quarter of fiscal 2011, HP estimates revenue of approximately $32.1 billion to $32.5 billion, GAAP diluted EPS of approximately $0.44 to $0.55, and non-GAAP diluted EPS of approximately $1.12 to $1.16.
Fourth quarter fiscal 2011 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.61 to $0.68 per share, related primarily to restructuring and shutdown costs associated with webOS devices, the amortization and impairment of purchased intangibles, restructuring charges and acquisition-related charges.
HP expects full year fiscal 2011 revenue in the range $127.2 billion to $127.6 billion, GAAP diluted EPS of $3.59 to $3.70, and non-GAAP diluted EPS of $4.82 to $4.86.
Full year fiscal 2011 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $1.16 to $1.23 per share, related primarily to restructuring and shutdown costs associated with webOS devices, the amortization and impairment 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.
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