HP is executing well in tough times, says Hurd

19 Feb 2009

The world’s No 1 technology player Hewlett-Packard (HP) has reported a modest 1pc rise in revenues of US$28.8bn for the first quarter, with operating profits down 5pc to US$2.5bn.

But there is a break in the clouds for the iconic tech giant, with the EDS integration plan proceeding ahead of plan and HP’s Services division reporting record profits of US$1.1bn.

“HP is a market leader executing well in a tough market,” said Mark Hurd, HP chairman and chief executive officer.

“Our market strength, disciplined cost management and diverse portfolio allowed us to differentiate HP in the global marketplace and gain share in key markets,” Hurd added.

Revenue grew 11pc in the Americas to US$12.4bn, but declined 3pc in Europe, the Middle East and Africa and 11pc in Asia Pacific to US$12bn and US$4.4bn, respectively.

Revenue from outside of the US in the first quarter accounted for 65pc of total revenue, with revenue in the BRIC countries (Brazil, Russia, India and China) declining 22pc, while accounting for 7pc of total HP revenue.

In HP’s Personal Systems Group (PSG), revenue declined 19pc to US$8.8bn, with unit shipments down 4pc. Notebook revenue for the quarter was down 13pc, while desktop revenue declined 25pc.

HP’s Imaging and Printing Group (IPG) saw revenue decline 19pc to US$6bn. Supplies revenue was down 7pc, while commercial hardware revenue and consumer hardware revenue declined 34pc and 37pc respectively.

Printer unit shipments decreased 33pc, with consumer printer hardware units down 31pc and commercial printer hardware units down 39pc.

HP’s Enterprise Storage and Servers (ESS) division reported total revenue of US$3.9bn, down 18pc. Storage revenue declined 7pc, with the mid-range EVA product line down 7pc.

Server revenue and Business Critical Systems revenue declined 22pc and 17pc respectively, while ESS blade revenue grew 4pc. Operating profit was US$405m, or 10.3pc of revenue, down from US$673m, or 14pc of revenue year-on-year.

But there was a break in the clouds, Services revenue increased 116pc to US$8.7bn due primarily to the EDS acquisition. Revenue in Technology Services was flat. ITO, Application Services and BPO posted revenues of US$3.9bn, US$1.6bn and US$743m, respectively.

In recent weeks, siliconrepublic.com reported that a significant number of staff at HP’s manufacturing operations in Leixlip, where the company employs over 3,000, will be taking eight days of “enforced leave” between St Patrick’s Day and Easter Monday.

A spokesperson for HP in Ireland said the company was still committed to its Irish operations, and that the move was a cost-cutting effort and redundancies were not on the cards.

HP’s neighbouring Intel operation, where over 5,000 are employed, learned this week that the microprocessor giant is seeking 300 voluntary redundancies.

By John Kennedy

Pictured: HP TouchSmart

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years