Hurd makes his mark at HP

HP’s global sales climbed 7% year-on-year to US$22.9 billion for its fourth fiscal quarter ending October 2005. After-tax profits fell to US$400m from US$1.1 billion a year earlier. Bearing in mind that the slide in profits was due to US$1.1 billion worth of adjustments — related primarily to restructuring and amortisation costs — HP posted a pretty solid set of numbers.

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By  Stuart Wilson Published  November 19, 2005

HP’s global sales climbed 7% year-on-year to US$22.9 billion for its fourth fiscal quarter ending October 2005. After-tax profits fell to US$400m from US$1.1 billion a year earlier. Bearing in mind that the slide in profits was due to US$1.1 billion worth of adjustments — related primarily to restructuring costs and amortisation costs — HP posted a pretty solid set of numbers. “HP delivered another strong quarterly performance, with balanced revenue growth, good cost discipline, improved margins in key businesses and strong cash flow,” said Mark Hurd, HP CEO and president. “We are pleased with our progress to date, but there is more work ahead of us.” Sales in the Europe, Middle East and Africa (EMEA) region climbed 8% year-on-year to hit US$9.1 billion in the fiscal fourth quarter. Globally, sales from HP’s personal systems group (PSG) jumped 9% to US$7.1 billion as unit shipments climbed 13%. PSG also managed to boost its margins to 2.8% in the fourth quarter, recording operating profits of US$200m. A year earlier, the unit’s operating profits totalled US$77m — a margin of just 1.2%. Desktop revenues were up 1% year-on-year while sales derived from notebooks climbed 23%. According to HP, sales to consumer clients rose 14% while revenues derived from commercial clients increased 8% year-on-year. HP’s imaging and printing group (IPG) remained the vendor’s major profit pool, with an operating margin of 13.2% resulting in earnings of US$896m. Despite IPG sales climbing 4% year-on-year to US$6.8 billion, operating profits actually slipped 18%. The enterprise storage and servers (ESS) business saw sales climb 10% year-on-year globally to US$4.5 billion. Compared to fourth quarter 2004, industry standard server revenues climbed 12% and networked storage jumped 17% while business-critical systems slipped 1%. ESS reported operating profits of US$405m — up from US$100m a year earlier, representing an increase in operating margins from 2.5% to 9.1%.

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