HP Reports Revenue Increase
PALO ALTO, CA—May 17, 2011—HP announced financial results for its second fiscal quarter ended April 30, 2011. Net revenue of $31.6 billion was up 3.0 percent from the prior-year period as reported and up 1.0 percent when adjusted for the effects of currency. Second quarter gross margins and operating margins were up 1.0 percent and 0.1 percent, respectively, year over year
“HP executed well and delivered a solid quarter,” said Léo Apotheker, HP president and CEO. “Our enterprise strategy, with services at its core, is focused on higher value-added solutions. Today we are accelerating our efforts to align our services business model to our long-term strategy to deliver unprecedented value to our customers and a better return for our shareholders.”
“In the second quarter, we saw continued strength in the enterprise with combined revenue from our commercial businesses up 8.0 percent year over year,” said Cathie Lesjak, HP executive vice president and chief financial officer. “We again expanded our margins and increased both earnings per share and cash flow from operations double digits year over year.”
Trends and regional performance
Results were largely driven by performance in the commercial sector as businesses continued to spend on technology. HP experienced uneven consumer performance across its product categories during the quarter with continued softness in consumer PCs across all geographies.
Second quarter revenue was up 2.0 percent year over year in the Americas to $13.8 billion. Revenue was down 1 percent in Europe, the Middle East and Africa and up 10 percent in Asia Pacific to $11.7 billion and $6.1 billion, respectively. When adjusted for the effects of currency, revenue was up 1.0 percent in the Americas, flat in Europe, the Middle East and Africa and up 4 percent in Asia Pacific.
Revenue from outside of the United States in the second quarter accounted for 66 percent of total HP revenue. HP saw accelerated growth in BRIC countries (Brazil, Russia, India and China) with revenue increasing 19 percent while accounting for 12 percent of total HP revenue.
Business group highlights
• Imaging and Printing Group (IPG) revenue grew 5 percent year over year with a 17 percent operating margin. IPG continued to deliver strong performance across the business with share gains in all printing categories and 41 percent year-over-year growth in commercial printer hardware units. IPG continued to drive innovation and momentum with the new ePrint platform, graphic arts and other commercial print solutions.
• Services revenue grew 2 percent year over year with a 15.2 percent operating margin. To improve long-term performance, HP is accelerating alignment of the services business with the company’s overall strategy, including making investments to drive more value-added solutions and migration to the cloud.
• Personal Systems Group (PSG) revenue declined 5.0 percent year over year with a 5.7 percent operating margin. PSG remains the PC market leader in terms of units, revenue and profit share. PSG maintained its market leadership position in Commercial PCs, with Commercial Client revenue growth of 13 percent outpacing Consumer Client revenue decline of 23 percent in the quarter.
• Enterprise Servers, Storage and Networking (ESSN) revenue grew 15 percent year over year with a 13.8 percent operating margin. ESSN delivered a solid quarter with HP’s innovative converged infrastructure products winning in the data center. HP gained momentum in cloud with strong interest in and the successful launch of HP CloudSystem.
• HP Software revenue grew 17 percent year over year with a 20.2 percent operating margin. HP Software revenue was driven by strong growth in licenses and services of 29 percent and 22 percent, respectively.
• HP Financial Services revenue grew 17 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.
Asset management
HP generated $4.0 billion in cash flow from operations in the second quarter. Inventory ended the quarter at $6.8 billion, with days of inventory up 1 day year over year at 26 days. Accounts receivable of $18.6 billion was up 10 days year over year at 53 days. Accounts payable ended the quarter at $14.2 billion, up 3 days from the prior-year period. HP’s dividend payment in the second quarter resulted in cash usage of $182 million. HP also utilized $2.7 billion of cash during the quarter to repurchase approximately 64 million shares of common stock in the open market. HP exited the quarter with $12.8 billion in gross cash.
Outlook
HP’s revised outlook for the third quarter and the full year fiscal 2011 reflects an expected near-term impact from the Japan earthquake and related events, continued softness in sales of consumer PCs, and reduced operating profit expectations for Services.
For the third quarter of fiscal 2011, HP estimates revenue of approximately $31.1 billion to $31.3 billion. It expects full year fiscal 2011 revenue in the range of $129 billion to $130 billion.
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.
About HP
HP creates new possibilities for technology to have a meaningful impact on people, businesses, governments and society. The world’s largest technology company, HP brings together a portfolio that spans printing, personal computing, software, services and IT infrastructure at the convergence of the cloud and connectivity, creating seamless, secure, context-aware experiences for a connected world. More information about HP is available at www.hp.com.
Source: HP.
- Companies:
- Hewlett-Packard