Computer Group Revenue Rises 5% At HP, Hits $6.4B

By Jeff Malester On May 23 2005 - 6:00am

With notebook and desktop computers leading the way, the personal systems group at Hewlett-Packard reported a 5 percent increase in revenue during the company's fiscal second quarter, hitting $6.4 billion, up from $6 billion in the year-ago period. Unit shipments in the computer segment climbed 12 percent in the three months, compared with the prior year.

Notebooks, which accounted for $2.2 billion in sales during the second quarter, ended April 30, enjoyed a 10 percent increase over the $2 billion recorded in the same three months in 2004. Desktop revenue in the period increased 1 percent to $3.52 billion from a year-ago $3.47 billion.

The personal systems group reported an operating profit of $147 million in the second quarter, or 2.3 percent of revenue, up from $44 million year-on-year.

HP's largest product segment, its imaging and printing group — not including the diverse segments that make up the combined technology solutions group — recorded a 5 percent increase in revenue during the second quarter, coming in at $6.4 billion, up from a year-earlier $6.1 billion.

Consumer hardware revenue increased 3 percent in the quarter, reaching $1.7 billion, compared with $1.6 billion the prior year, while unit shipments rose 12 percent. Color laser shipments jumped 96 percent year-over-year, said HP. Supplies revenue hit $3.6 billion, an increase of 4 percent over the $3.5 billion posted last year.

However, costly workforce reductions in the company's key printer segment, as well as increasing sales of lower cost supplies, such as toner and ink, and lower prices in general, pushed second-quarter segment operating profit down 14 percent to $814 million, or 12.7 percent of revenue, from a year-earlier $952 million. The drop reflects $71 million in workforce reductions, lower hardware pricing due to pricing competition and mix shifts within the supplies category, said HP.

The quarter's contributions from computers and printers helped boost consolidated HP revenue by 7 percent year-over-year, hitting $21.6 billion, up from the prior year's $20.1 billion.

Consolidated net income rose 9 percent to $966 million, compared with $884 million in the second quarter of 2004. If special items, such as $177 million in workforce reduction expenses, were excluded, HP would have posted quarterly profit of $1.07 billion, compared with $1.03 billion the previous year.

Revenue in the Americas grew 4 percent during the second quarter, reaching $8.8 billion, reported the company.

“HP had a solid quarter,” said Mark Hurd, president/CEO, citing the positive numbers. “Nevertheless, our overall performance leaves room for improvement in many of our businesses.” Hurd has been chief exec since February, when Carly Fiorina left the company.

In the six months, personal systems group revenue increased year-on-year from $12.2 billion to $13.2 billion, while segment operating profit nearly tripled from $105 million to $294 million.

The imaging and printing group saw six-month revenue rise to $12.5 billion from a year-ago $12 billion. Earnings from operations slid during the period, from $1.9 billion, down to $1.7 billion.

Consolidated six-month revenue reached $43 billion, up from $39.6 billion in the same time frame last year. Net income rose to $1.9 billion for the six months, up from a year-on-year $1.8 billion.

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