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HP Reports Higher Q3 Sales, Earnings

8/17/2006 01:09:00 PM Eastern

Palo Alto, Calif. - HP reported higher net revenue and dramatically higher profits for the third quarter ended July 31.

Net revenue for the quarter was $21.9 billion, a 5 percent year-over-year gain or 6 percent when adjusted for the effects of currency. GAAP operating profit was $1.5 billion up from $100 million in the prior year period. GAAP financial information for the third quarter of 2005 reflects a tax adjustment resulting from HP’s decision to repatriate $14.5 billion in cash from foreign earnings.

Non-GAAP operating profit was $1.7 billion versus $1.1 billion in the previous year. The non-GAAP financial information excludes $108 million of adjustments on an after-tax basis, or $0.04 per diluted share, related primarily to amortization of purchased intangibles, HP said

“HP delivered another solid quarter with strong revenue growth, improved margins and healthy cash flow,” said Mark Hurd, HP’s CEO/president. “We gained share without sacrificing margins and continue to execute well against our long-term plan. This is visible in our third quarter results and improved fourth quarter outlook.”

During the quarter, on a year-over-year basis, revenue in the Americas grew 8 percent to $9.7 billion. When adjusted for the effects of currency, revenue in the Americas grew 7 percent.

In its Personal Systems Group (PSG) revenue grew 8 percent year-over-year to $6.9 billion, with unit shipments up 14 percent. On a year-over-year basis, desktop revenue increased 5 percent and notebook revenue grew 14 percent. Consumer client revenue increased 17 percent. Operating profit was $275 million, or 4 percent of revenue, up from a profit of $163 million, or 2.6 percent of revenue, in the prior year period.

For its Imaging and Printing Group (IPG) revenue grew 5 percent year-over-year to $6.2 billion. On a year-over-year basis, supplies revenue grew 9 percent and consumer hardware revenue declined 3 percent. Printer unit shipments increased 15 percent year-over-year, with consumer printer hardware units up 13 percent and commercial printer hardware units up 23 percent. Momentum in key growth initiatives continued, with All-in-One unit shipments up 17 percent year-over-year, color laser printer shipments up 70 percent and printer-based MFP shipments up 196 percent. Operating profit was $884 million, or 14.2 percent of revenue, up from a profit of $771 million, or 13 percent of revenue, in the prior year period.