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HP Computer Biz Climbs 11%

2/17/2005 07:36:00 AM Eastern

Palo Alto, Calif. — Revenue for the personal systems group at Hewlett-Packard, namely desktop and notebook computers, increased 11 percent in the company’s fiscal first quarter, rising to $6.9 billion, from $6.2 billion in the year-ago period.

Earnings from operations for the group more than doubled to $147 million in the three months, ended Jan. 31, from $61 million in 2003.

Unit shipments for HP’s computer business climbed 12 percent in the first quarter year-on-year, reflecting stable average selling prices. Desktop revenue rose 8 percent, hitting $3.8 billion, up from $3.5 billion in the first quarter a year earlier. Notebook revenue grew 9 percent to $2.3 billion, from $2.1 billion in the same period in 2003. Handhelds were up 15 percent to $290 million from $253 million. Operating profit margin for the segment rose to 2.1 percent, said HP.

Sales in HP’s imaging and printing group did not match the computer side, with revenue rising only 3 percent in the first quarter, reaching $6 billion, compared with $5.9 billion year-over-year. Sales of ink cartridges jumped 8 percent to $3.3 billion from $3 billion, fueled by strong growth in color printing. However, operating earnings for the imaging and printing segment slipped to $932 million, from $967 million, as margins continued to narrow under pressure from competitors such as Lexmark and Dell.

“While we continue to make progress in growing our top line, there is work to be done to improve our profitability,” said newly installed CEO and chief financial officer Robert Wayman. “Our management team is focused on driving improved execution to serve our customers, strengthen our competitiveness and improve shareholder value.”

Only a week after CEO Carly Fiorina was shown the door by HP’s board, consolidated financial results for the first quarter showed only a slight rise in profit, with year-on-year revenue growing 6 percent in the Americas to $8.9 billion, and revenue overall climbing 10 percent to $21.5 billion from $19.5 billion. When adjusted for the effects of global currency fluctuations, consolidated first-quarter revenue grew only 5 percent year-over-year.

Consolidated net income in the first quarter moved up to $943 million, less than 1 percent higher than the $936 million recorded in the same three months the previous year. The increase was fueled by revenue gains across all the company’s businesses. First-quarter profit was held down by $115 million in special item charges.

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