HP 4th Quarter 2008 Earnings

HP Reports Fourth Quarter 2008 Results

>Fourth quarter net revenue up 19%, or $5.3 billion, from a year earlier to $33.6 billion
>Fiscal 2008 net revenue up 13%, or $14.1 billion, to $118.4 billion
>Fourth quarter GAAP operating profit up 4% to $2.7 billion; $0.84 earnings per share, up from $0.81 a year earlier
>Fourth quarter non-GAAP operating profit up 21% to $3.4 billion; $1.03 earnings per share, up from $0.86 a year earlier
>Fourth quarter cash flow from operations of $3.3 billion; fiscal 2008 cash flow from operations of $14.6 billion, up 52% from a year earlier
>Closed EDS acquisition; integration on track

Revenue grew 17% in the Americas, 22% in Europe, the Middle East and Africa and 14% in Asia Pacific to $14.0 billion, $14.1 billion and $5.5 billion, respectively. When adjusted for the effects of currency, revenue grew 17% in the Americas, 15% in Europe, the Middle East and Africa and 12% in Asia Pacific. Revenue from outside of the United States in the fourth quarter accounted for 68% of total revenue, with revenue in the BRIC countries (Brazil, Russia, India and China) growing 23% over the prior-year period and accounting for 9% of total revenue.

Personal Systems Group
Personal Systems Group (PSG) revenue grew 10% to $11.2 billion, with unit shipments up 19%. Notebook revenue for the quarter grew 21%, while Desktop revenue declined 2%. Commercial client revenue grew 7%, while Consumer client revenue increased 15%. Operating profit was $616 million, or 5.5% of revenue, up from $589 million, or 5.8% of revenue, in the prior-year period.

Imaging and Printing Group
Imaging and Printing Group (IPG) revenue declined 1% to $7.5 billion. Supplies revenue grew 9%, while Commercial hardware revenue and Consumer hardware revenue declined 10% and 21%, respectively. Printer unit shipments decreased 8%, with Consumer printer hardware units down 8% and Commercial printer hardware units down 9%. Operating profit was $1.2 billion, or 15.5% of revenue, versus $1.1 billion, or 14.5% of revenue, in the prior-year period.

Enterprise Storage and Servers
Enterprise Storage and Servers (ESS) reported total revenue of $5.1 billion, down 1%. Storage revenue grew 13% led by 16% revenue growth in the midrange EVA product line and 9% revenue growth in the high-end XP product line. Industry Standard Server revenue declined 3% and Business Critical Systems revenue declined 10% while ESS blade revenue increased 43%. Operating profit was $705 million, or 13.9% of revenue, down from $736 million, or 14.4% of revenue, in the prior-year period.

HP Services
HP Services (HPS) revenue increased 99% to $8.6 billion, led by $3.9 billion revenue resulting from the EDS acquisition for the period between the Aug. 26 acquisition date and Oct. 31. Excluding EDS, HPS revenue grew 10%. Revenue in Technology Services and Outsourcing Services grew 10% and 15%, respectively, with revenue in Consulting and Integration up 2%. Operating profit was $920 million, or 10.6% of revenue, compared to $515 million, or 11.8% of revenue, in the prior-year period.

HP Software
HP Software revenue grew 13% to $855 million, led by 15% growth in the Business Technology Optimization portfolio. Operating profit was $195 million, or 22.8% of revenue, up from $145 million, or 19.1% of revenue, in the prior-year period.

HP Financial Services
HP Financial Services (HPFS) reported revenue of $691 million, up 5%. Financing volume increased 5%, and net portfolio assets declined 2%. Operating margin was 7.4% of revenue, up from 7.3% in the prior-year period.