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Software Is the Star Performer for HP

HP is lauding its software unit as its major growth area, following the vendor’s latest financial results. HP reported net revenue of $28.3 billion, up 15 percent from a year earlier and up 11 percent when adjusted for the effects of currency for its fourth fiscal quarter ended Oct. 31, 2007. GAAP operating profit was […]

Written By

Sara Driscoll

Nov 20, 2007

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HP is lauding its software unit as its major growth area, following the vendor’s latest financial results.

HP reported net revenue of $28.3 billion, up 15 percent from a year earlier and up 11 percent when adjusted for the effects of currency for its fourth fiscal quarter ended Oct. 31, 2007. GAAP operating profit was $2.6 billion while non-GAAP operating profit was $2.8 billion.

However, revenue in the United States grew 10 percent on a year-over-year basis to $11.9 billion, while revenue in Europe, the Middle East and Africa grew 19 percent to $11.6 billion. Revenue grew 20 percent in Asia Pacific to $4.8 billion. When adjusted for the effects of currency, revenue in the United States grew 9 percent, revenue in Europe, the Middle East and Africa grew 12 percent and revenue in Asia Pacific grew 14 percent. Revenue from outside of the United States in the fourth quarter was 67 percent.

Software was a top performer for the vendor. HP Software revenue doubled over the prior-year period to $698 million, led by strong growth from the businesses acquired in HP’s purchase of Mercury Interactive.

“I think on software, we gave a range a year ago of getting the software business to look like what a scaled software business ought to look like, and we gave ranges in ’08 of roughly 18 percent to 22 percent, and we’ve done nothing to change that view,” Mark Hurd, HP chairman and CEO, said in a conference call. “We believe that the software business has done a nice job integrating Mercury as well as several other acquisitions during the year; it wasn’t just Mercury. They’ve also done a nice job organically of building up our organic capabilities at the same time as we’ve been doing some integration. So we feel real good about the operationalization of all of that and I think you’ll see that platform that I described with the Mercury integration generating the kind of profit levels that we describe.”

The vendor was buoyed by its notebook revenue, which grew 49 percent over the prior year period. However, desktops showed only a 15 percent growth. Overall the Personal Systems Group revenue grew 30 percent year over year to $10.1 billion, with unit shipments up 31 percent on a year-over-year basis.

Other groups within the vendor also showed some growth; Imaging and Printing Group revenue grew 4 percent year over year to $7.6 billion, Enterprise Storage and Servers reported revenue of $5.2 billion, up 10 percent over the prior-year period; HP Services revenue increased 7 percent year over year to $4.4 billion and HP Financial Services reported revenue of $657 million, an increase of 21 percent year over year.

HP estimates first-quarter fiscal year 2008 revenue will be approximately $27.4 billion to $27.5 billion.

Software Is the Star Performer for HP

Sara Driscoll

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