A 31 per cent jump in laptop PC sales helped drive Hewlett-Packard’s strong quarterly results on Tuesday, although there were signs of growth in all its businesses.
Total revenue for the second quarter was US$28.3 billion, up 11 per cent from a year earlier. Net income was US$2.06 billion, up from US$1.78 billion in the same quarter a year ago, the company said.
HP announced preliminary financial results last week, when it also revealed plans to buy IT services company Electronic Data Systems for US$13.9 billion. It delayed the full results, including details of how the various segments performed, until Tuesday.
HP’s biggest growth came from its software and services divisions, although they started from a smaller base. Services revenue increased 12 per cent from the same quarter last year to US$4.6 billion. Software revenue jumped 28 per cent to US$727 million, HP said.
The Personal Systems Group is HP’s biggest division. Revenue there grew 16 per cent from a year earlier to US$10.1 billion, with unit sales up 21 per cent, the company said. The growth came almost all from laptop sales, which climbed 31 per cent. Desktop PC sales were flat.
In a conference call after the results were released, CEO Mark Hurd said the EDS acquisition will allow HP to capture a significantly bigger portion of what businesses spend on IT.
“We expect the acquisition to accelerate our reach into key enterprise accounts,” he said. “HP is great at engineering and customer support, but we have a coverage problem. We expect the EDS acquisition to double our share of the enterprise wallet and create a platform for opportunities for new business growth,” he said.
He said the combination of software and services will become increasingly important for HP and the industry.
“The alignment of software and services is a really strategic thing for us in the context of automating (business) processes,” he said. “EDS is the biggest applications outsourcer in the world, the biggest applications testing company in the world. You’ll continue to see more and more alignment of software and services in the evolution of the services industry.”
Hurd pledged to cut costs at the combined company, which, among other things, will probably mean job cuts. “Make no mistake, we will get the cost out. We will create value for our shareholders,” he said.
