HP Q4 revenues rocket on strong printer and PC sales

20 Nov 2003

HP reported a solid fourth quarter with revenue of US$19.9bn, up 10pc year-on-year. The company attributed the results to particularly strong sales in its printer and PC divisions.

HP’s operating profit for the quarter was US$1.4bn, up 63pc year-on-year. Cash flow from operations totalled US$2.4bn.

The company’s imaging and printing group posted its first-ever US$1bn operating profit in a single quarter. That business accounted for 66pc of the company’s operating profit. Imaging and Printing posted record revenues of US$6.2bn in the quarter, an increase of 11pc year-over-year and 19pc sequentially, led by year-on-year supplies growth of 14pc, business hardware growth of 6pc and home hardware growth of 5pc. Digital imaging revenue grew 18pc over the prior year period.

The company’s Enterprise Systems division returned to profitability with a US$106m operating profit. Enterprise systems revenue was US$4.1bn, up 2pc year-on-year and 10pc sequentially.

HP Services revenue was US$3.2bn, up 5pc both year-over-year and sequentially. Strong managed services momentum continued with year-over-year growth of 36pc. For the full year, combined company revenue for managed services was up 22pc. Operating profit was US$393m, or 12.2pc of revenue.

HP’s PC and gadgets division, otherwise known as its Personal Systems division, saw revenue total US$6.0bn in the quarter, up 19pc year-over-year and 21pc sequentially. Units increased 35pc year-over-year, fuelled by notebook growth of 53pc and desktop growth of 23pc. HP widened its lead in the notebook market with year-over-year unit growth of 60pc in the third calendar quarter, growing at almost twice market rates and 18 percentage points faster than the nearest competitor. Over the past four calendar quarters, HP increased its share of the total worldwide PC market by almost two percentage points.

Looking forward, HP estimates revenues will range from US$19.1bn to US$19.5bn in its first fiscal quarter of 2004, as compared to current analyst consensus of US$19bn, which is based on anticipated seasonal decline of 2-4pc.

“This was a great quarter. By any measure, we hit our stride and demonstrated what the merger was all about. I’m proud of the entire HP team,” said Carly Fiorina, HP chairperson and CEO.

“HP’s excellent fourth quarter performance capped a fiscal year in which we delivered on our commitments. We achieved profitability in each of our businesses. We grew revenue and market share. We exceeded our integration and cost saving goals ahead of schedule, and we generated cash flow from operations in excess of US$6bn for the year,” she said.

“We did all of this while strengthening our direct sales, service and support capabilities and investing more than US$1bn in software, US$600m in the HP brand, US$400m in our IT systems, and US$275m in training and developing our people.

“As we committed, we returned the Enterprise Systems business to profitability in the fourth quarter by delivering a US$106m operating profit. This represents a US$610m turnaround in profitability in this business on a full-year combined company basis. Strong revenues were accompanied by year-over-year gross margin improvement, record revenues in software, record shipments of industry-standard servers and high-end Superdome systems, and a strong performance in the fastest growing segment of the storage market.

“HP Services posted strong quarterly revenue and operating profit driven by robust growth in managed services and improved customer support margins. Managed services grew 36pc year-over-year, four times faster than the market. Customers have been looking for an alternative to IBM, and they’ve found it in HP.

“Revenue in Personal Systems was US$6bn, up 19pc year over year and 21pc sequentially, fuelled by 53pc unit growth in notebooks and 23pc unit growth in desktops. We saw strong revenue growth in all regions and operating profit improved by almost US$400m on a full-year combined company basis. We also gained significant share across the PC market and again outgrew our nearest competitor in notebooks, further solidifying our lead in this strategic category.

“Imaging and Printing delivered another record revenue and profit performance for the quarter and the full year. Quarterly operating profit surpassed US$1bn for the first time, as we continued to gain share. We set new records for shipments of digital cameras, inkjet printers, laser printers, and supplies. In fiscal 2003, we shipped a record 43 million printers, with almost 13 million in the fourth quarter alone,” said Fiorina.

By John Kennedy