HP and Cisco detect green shoots

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HP and Cisco detect green shoots

Industry will return to growth next year.

HP has added its voice to those in the IT industry seeing green shoots of recovery and a potential return to growth in 2010.

“We expect the IT industry to return to growth in 2010 and believe that HP will outpace the market,” said Mark Hurd, HP’s chairman and chief executive, presenting the company's outlook for the next fiscal year at its Securities Analyst Meeting in California yesterday.

HP expects to see fiscal 2010 revenues of between US$117bn ($134bn) and US$118bn, just short of the US$118.4bn it recorded for 2008.

As far as this year goes, the company is predicting its global fourth-quarter revenues will rise sequentially by eight percent, driven mainly by increased sales in the US and China.

It estimates that year-end sales will be between four and five percent lower than its 2008 total.

Although HP beat Wall Street expectations for the third quarter, its sales fell two percent on the year-ago period to US$27.5bn, propped up by a 93 percent revenue boost to its services division primarily derived from its purchase of EDS, which has now been renamed HP Enterprise Services. Net profits for the quarter dropped 19 percent from US$2bn last year to US$1.6bn this year.

Like Hurd, Cisco chief executive John Chambers has also voiced positive views on the economy. On announcing the networking giant’s fiscal fourth quarter figures in August, he said that a turning point in the recession may finally have been reached.

Although the vendor’s sales during the quarter fell 18 percent to US$8.5bn on net income that plummeted 46 percent to US$1.1bn, it posted its first sequential growth in orders for a year.

“We saw a number of positive signs this quarter in the economy and in our business, especially comparing our sequential quarter-over-quarter order trends,” Chambers said.

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