HP in the pink with Q1 profit jump
- 19 February, 2007 22:00
Hewlett-Packard topped Wall Street's revenue and earnings expectations in the first quarter of its 2007 fiscal year.
While happy with what its CEO called a "solid quarter," HP said it would seek to further control costs by putting an end to its defined benefit pension plan for long-time HP employees and is offering an early retirement package.
HP posted net income of US$1.5 billion, or $0.55 a share, in the quarter ended January. 31, 2007, compared to $1.2 billion, or $0.42 a share in the year ago quarter, the Palo Alto, California company said on Tuesday.
HP described the expenses as related primarily to the amortization of purchased intangibles and in process research and development charges related to acquisitions. It also cited stock-based compensation expense in both current and prior years.
Revenue came in at $25.1 billion, up 11 percent from last year's first quarter and above the $24.27 billion analyst forecast.
Growth came from HP's personal systems group, which is desktop and laptop computers for consumers, with a 17 percent year-over-year revenue growth, and from imaging and printing, withseven percent revenue growth.
HP topped rival Dell as the leading seller of personal computers in 2006, according to IDC. At financially troubled Dell, former CEO and chairman Michael Dell returned to the CEO office, following the ouster of Kevin Rollins last month.
While HP chairman and CEO Mark Hurd said the quarter was strong overall, he was disappointed with the company's enterprise storage and server products unit.
Revenue in that division grew five percent to $4.5 billion and greater efficiency meant the company made more profit from the business. However, storage revenue alone grew only three percent, Hurd said. Although it's midrange EVA line of storage products sold well, sales of its tape storage products and high-end storage devices were weak.
"We have got to drive top line growth," he said. While HP has been hiring new sales people, it also needs to develop more sales prospects. "We just don't cover enough accounts," Hurd said.