May 20th, 2008
HP's second quarter solid; Focus remains on EDS
Hewlett-Packard delivered strong second quarter results Tuesday with revenue up 11 percent from a year ago, but analysts are likely to remain fixated on the EDS acquisition.
The company said second quarter net income was $2.1 billion, or 80 cents a share, on revenue of $28.3 billion, up 11 percent from a year ago. The results (statement) were in line with HP’s outlook following its acquisition of EDS (all resources). Excluding charges, HP’s earnings were $2.2 billion, or 87 cents a share. Wall Street was expecting earnings of 85 cents a share, according to Thomson Financial.
Also see: HP seals EDS deal; Services No. 2 behind IBM; Can Hurd run EDS better?
As for the outlook, HP said third quarter earnings will by 76 cents to 77 cents a share on revenue between $27.3 billion to $27.4 billion. Excluding charges, HP’s earnings will be 82 cents a share to 83 cents a share. Fiscal 2008 revenue will be $114.2 billion to $114.4 billion with earnings of $3.54 a share to $3.58 a share excluding charges. The outlook was also expected.
By the numbers for the second quarter:
- Revenue in the Americas was up 4 percent to $11.1 billion. Revenue in Europe, Middle East and Africa was up 16 percent to $11.9 billion. Revenue in Asia Pacific was up 16 percent to $5.2 billion.
- Research and development spending was $1.8 billion, up from $1.78 billion a year ago.
- Personal systems group revenue was up 16 percent to $10 billion. Unit shipments were up 21 percent. As expected, notebooks led the charge with revenue growth of 31 percent. Desktops were flat. Operating profit checked in at $544 million, up from $417 million a year ago.
- Printing revenue was up 6 percent to $7.6 billion with operating profit of $1.2 billion. Safe to say HP’s imaging and printing group remains the cash cow of the company. Supplies revenue was up 8 percent with commercial hardware up 6 percent from a year ago. Consumer hardware revenue, however, fell 3 percent.
- Enterprise storage and servers revenue was up 4 percent to $4.8 billion. Operating profit was $655 million, up from $452 million a year ago. ESS blade revenue was up 68 percent with storage up 14 percent.
- HP services had revenue growth of 12 percent to $4.6 billion. Operating profit was $508 million.
- Software revenue was $727 million, up from $568 million a year ago. Operating profit was $93 million.
- Cash and equivalents was $11.8 billion.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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