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Asia-Pacific and G6 servers driving HP revenue rise

Asia-Pacific and G6 servers driving HP revenue rise

Global vendor posts positive first quarter results and ups its outlook for the year

The Asia-Pacific region has given HP its biggest percentage revenue growth in the first quarter of its financial.

For the quarter ending 31 January 2010 the global vendor posted net revenue gains of 8 per cent on the same period in 2009 for a total of $US31.2 billion.

Revenue growth in the Asia-Pacific during the quarter almost tripled that of all other regions. The region achieved a gain of 26 per cent on the same period in 2009 bringing in $US5.4 billion.

In contrast, in the Americas revenue was up 9 per cent year on year to $US13.6 billion and Europe, the Middle East and Africa (EMEA) rose just one per cent to $US12.1 billion.

The company also said revenues from outside of its home country, the US, accounted for 65 per cent of the total in the quarter to 31 January 2010. The BRIC countries – Brazil, Russia, India and China – made up 10 per cent of the total revenue during the period with an increase of 41 per cent on the same period in the prior year.

The result reflects the relative strength of Asia-Pacific economies which continue to provide many multi-national vendors with growth while other regions flounder.

After the first quarter in 2009 HP said its biggest market continued to be Europe, the Middle East and Africa, where revenue grew 15 per cent to $US12.3 billion. Asia-Pacific revenue climbed 22 per cent to $US4.9 billion at the time while growth in the Americas was a sluggish 8 per cent, generating $US11.2 billion.

Overall, General Accepted Accounting Principles (GAAP) operating profit rose 20 per cent to $US3 billion for the quarter ending 31 January 2010.

In an analyst briefing HP CEO Mark Hurd said the Enterprise Storage and Servers (ESS) division revenue result – up by 11 per cent to $US4.4 billion globally – was driven in large part by the vendor's range of G6 servers released around March last year.

"Our G6 servers give customers a short payback period, and are being adopted more quickly than any previous generation," Hurd told analysts. "Yet still only a fraction of the installed base has been upgraded. Average selling prices continued to move up, and we delivered over 30 per cent operating leverage in this segment."

Along with an expected PC refresh by commercial organisations later this year, Hurd was confident of continued success in the server market.

"I think that we do see a pretty robust server refresh cycle through the year. What quarter hits at one time, what companies do what at what point in time, I can't exactly prognosticate to you. But we expect it to be pretty robust. And that is contained in our guidance. And for what we can see in our funnels looks very attractive to us," he said.

"As I also mentioned, the payback on these G6 installations, the TCO returns on that are just extremely attractive. So even in a timeframe of tight budgets, these look like very good deals. So we see a pretty strong uptake on it. As far as we can see, at least during this year, we think it will continue."

The company has raised its forecast for the full fiscal 2010 year (to 31 October) with revenues expected to hit $US121.5 billion to $US122.5 billion, up from past estimates of $US118.0 billion to $US119.0 billion. This does not include the potential impact of its acquisition of 3Com.

While the overall ESS division was up with the industry standard server revenue rising 27 per cent and blade revenue up by 24 per cent over the first quarter in 2009, storage revenue slipped by three per cent.

In the imaging and printing group (IPG) revenue rose four per cent to $US6.2 billion. The personal systems group (consumer focused) also achieved revenue gains of 20 per cent in the quarter over the same period in 2009.

On the down side, the vendors service revenue, which is driven in large part by EDS, was down one per cent to $US8.7 billion Hurd added he wanted to increase the company's headcount but did not elaborate further.

HP, like many other multinational vendors, does not break down its results on a country-by-country basis.


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