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HP PC Profit Nearly Triples

11/18/2005 09:15:00 AM Eastern

Palo Alto, Calif. — With notebooks and desktops leading the charge, revenue for personal systems, the computer group at Hewlett-Packard, increased 9 percent in the company’s fiscal fourth quarter, hitting $7.1 billion, up from a year-ago $6.5 billion.

Notebook revenue in the fourth quarter, ended Oct. 31, jumped 23 percent, reaching $2.8 billion, compared with $2.3 billion in the same three months last year. Desktop revenue edged upward 1 percent in the period, to $3.66 billion, from $3.62 billion a year ago. Overall unit shipments in the personal systems group, HP’s largest business division, rose 13 percent in the fourth quarter.

Operating profit for the personal systems group in the third quarter came in at $200 million, up from $77 million year-on-year. Operating profit margin was 2.8 percent of revenue, compared with 1.2 percent a year ago.

In HP’s imaging and printing group, quarterly revenue increased 4 percent to $6.8 billion, from $6.5 billion the prior year. Consumer hardware revenue in the fourth quarter was off 4 percent, down to $1.19 billion, from $1.24 billion in 2004. Printer unit shipment climbed 6 percent in the period. Supplies revenue grew 7 percent, hitting $3.8 billion, up from $3.5 billion a year ago.

Operating profit reached $896 million in the printer segment, down from a profit of $1.1 billion year-over-year. Operating profit margin was 13.2 percent of revenue in the fourth quarter, off from 16.6 percent in 2004.

In the 12 months, personal systems group revenue hit $26.7 billion, up from $24.6 billion the previous year. Earnings from operations rose to $657 million, more than tripling the $205 million registered last year.

For the year, HP’s printer business revenue increased to $25.2 billion, from $24.2 billion in 2004. Earnings from operations for the period decreased to $3.4 billion, from $3.8 billion the previous year.

Consolidated fourth quarter revenue at HP increased 7 percent, hitting $22.9 billion, compared with $21.4 billion last year. Revenue in the Americas grew 5 percent to $10 billion.

Consolidate net profit in the quarter fell 62 percent to $416 million from a year-ago $1.1 billion, with the company noting strong gains in its server and storage business, plus a healthy increase in PC sales. The profit slide was caused, in part, by a $1.1 billion after-tax charge for restructuring. Excluding the charge, HP earned $1.5 billion in the fourth quarter, compared with $1.2 billion in the same period in 2004.

“HP delivered another strong quarterly performance, with balanced revenue growth, good cost discipline, improved margins in key businesses and strong cash flow,” said Mark Hurd, president/CEO.

In the 12 months, HP revenue increased to $86.7 billion, up from $79.9 billion the previous year. Net earnings slipped to $2.4 billion for the year, down from $3.5 billion, due, in part, to a $1.7 pretax billion charge for restructuring.

The company said it was increasing its number of jobs eliminated to 15,300, compared with the 14,500 it had stated last July. The difference is expected to save nearly $2 billion annually, according to HP.

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