PCs help boost HP profits

By Alun Williams

Posted on 26 Feb 2003 at 12:52

The world's largest PC builder profits from its first quarter financial results.

For the first three months of its 2003 financial year, HP reports a slight decline in sales but a growth in profit.

Revenue for the new HP - these figures reflect the state of play after the merger with Compaq, remember - stood at $17.9bn. This is a decline from the $18.0bn reported for the fourth quarter of 2002. Earnings per share, however, increased to $0.24 from the $0.13 of the previous quarter.

'HP is making good headway and continues to execute well,' said HP chairman and CEO, Carly Fiorina. 'We made good progress on cost structures, achieved sequential market share gains in each of our businesses, and continued to improve gross margins.' Acknowledging that performance had been weak in the US market, she pointed to the strength of HP in Europe and Asia-Pacific.

The company also highlighted an improved gross margin (up from 25.9 per cent to 26.5 per cent), which it attributed to an improvement in HP's cost structures. This is an important figure given the scale and complexity of merging resources with Compaq. The company boasted 'integration-related cost savings' for the three months as $734m, 14 per cent above its expectations.

HP broke its results down across down across three business segments: Personal Systems, Enterprise Systems, and Services.

Personal Systems generated revenue totalling $5.1bn, 2 per cent up on the previous three months. It moved from the red into the black with an operating profit of $33m, compared to a loss of $68m in the last quarter. During the period in question, HP introduced a Tablet PC, the HP Media Center PC, two new HP iPAQ Pocket PCs and a number of budget notebook and desktop PC models. HP noted a milestone of 3 million handheld sales.

For enterprise systems, HP emphasised in increased market share in the server market. It was a bigger slice of a smaller pie, however, as revenue was down six per cent to $3.7bn. Operating losses were reduced from $129m to $83m. The company highlighted record worldwide shipments of ProLiant servers in a period that saw the launch of new AlphaServers, new ProLiant servers and 2- and 4-way blade servers.

In the managed services business, HP Services saw revenue fall 3 per cent to $3bn. Similarly customer support revenue fell 3 per cent sequentially. For services as a whole, operating profit stands at $341m, down 6 per cent sequentially.

You can read the full figures on the investor section of the HP Web site.

HP also used the financial results to summarise its holding of market share. Citing Gartner Dataquest, it claims a 30 per cent share of server shipments, displacing Sun as the number one Unix vendor worldwide. It also claimed pole position in worldwide disk storage revenue with a 27 per cent share. We reported, earlier in the year, that HP had claimed top spot in the worldwide PC sales league - HP claims PC top spot.

HP announced figures yesterday from IDC that put the company in the number one slot for printer market share in the US. With 59 percent of the overall printer market for Q4 2002, the figures show the company strengthening its hold for the third consecutive quarter.