PC industry downturn hits HP, Q3 revenues fall 8pc to US$27.2bn

22 Aug 2013

Technology behemoth HP has been hit by a fifth consecutive quarter of declining PC shipments and reported an 8pc fall in revenues to US$27.2bn, down from US$29.7bn a year ago. The company has instigated a management reshuffle: Bill Veghte is now head of the company’s enterprise business and Henry Gomez has been promoted to chief marketing officer.

Third-quarter non-GAAP diluted earnings per share came in at US$0.86, down 14pc from the previous year, in line with expectations.

“We once again achieved the financial performance we said we would, delivering US$0.86 in non-GAAP diluted earnings per share, within our previously provided outlook of US$0.84 to US$0.87,” said Meg Whitman, HP president and chief executive officer.

Future Human

“I remain confident that we are making progress in our turnaround. We are already seeing significant improvement in our operations, we are successfully rebuilding our balance sheet, our cost structure is more closely aligned with our revenue and we have reignited innovation at HP, with a focus on the customer,” Whitman said.

Revenue in HP’s Personal Systems Group was down 1pc year-on-year. Commercial revenue decreased 3pc and consumer revenue declined 22pc. Total units were down 8pc, with Desktops units down 9pc and Notebooks units down 14pc.

Printing revenue declined 4pc year-over-year, with a 15.6pc operating margin. Total hardware units were up 5pc with Commercial hardware units up 12pc and Consumer hardware units up 2pc. Supplies revenue was down 4pc.

Enterprise Group revenue declined 9pc year-over-year with a 15.2pc operating margin. Networking revenue was flat, Industry Standard Servers revenue was down 11pc, Business Critical Systems revenue was down 26pc, Storage revenue was down 10pc, and Technology Services revenue was down 7pc.

Enterprise Services revenue declined 9pc year-over-year, with a 3.3pc operating margin. Application and Business Services revenue was down 11pc and Infrastructure Technology Outsourcing revenue declined 7pc.

Software revenue was up 1pc year-over-year with a 20.5pc operating margin. Support revenue was up 4pc, license revenue was flat, professional services revenue was down 11pc and SaaS revenue was up 4pc.

HP Financial Services revenue was down 6pc year-over-year, with a 4pc decrease in net portfolio assets and a 9pc decrease in financing volume. The business delivered an operating margin of 11.3pc.

The company generated US$2.7bn in cash flow from operations during the quarter, down 6pc year-on-year.

Inventory ended the quarter at US$6.5bn, down one day over the year to 28 days.

HP employs 4,000 people in Ireland and is in the process of constructing a new 87,000 sq-foot R&D and cloud facility in Galway that will house up to 700 workers.

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