Services revenue bolsters HP results

HP has reported that its profits rose 14 percent over the last quarter, despite a drop in revenues of 8.4 percent.

Overall revenue fell to US$30.8 billion from US$33.6 billion last year but profits rose from US$2.1 billion to UIS$2.4 billion.

It was a bad quarter for the four traditional product areas of HP’s business, with all four reporting a fall in revenues although a rise in profits. However, revenue in the services division rose eight percent and cost cutting by the company had a positive effect on the bottom line.

“HP’s solid performance in Services drove record profit, and the accelerated pace in signings creates strong momentum going into 2010,” said Mark Hurd, chief executive officer of HP.

“Our operational execution and improving cost structure generated strong quarterly and year-end results. We expect to outperform the market due to our significant scale, broad portfolio and market-leading position.”

The services division, which includes EDS, saw profits rise over five percent to US$1.4 billion. Hurd said that the integration of EDS was ahead of schedule and the division had seen in increase in new contract signings.

HP’s PC division had a tough quarter, with profits hurt by discounting prices. Shipments were up eight per cent overall, but revenues fell by 12 percent. Desktop PCs were hardest hit, with revenues down 16 percent, double the fall for laptops.

Server revenues fell 17 percent and while blade systems revenue fell only eight per cent more specialised systems were harder hit, with Business Critical Systems revenues falling by a third.

The printing division suffered most, with overall revenues down 15 percent and shipments falling 20 percent. Commercial printing hardware had a particularly bad quarter with revenues down 38 percent.

Overall Hurd said that the "economy remains challenging, but we see encouraging signs of recovery."