HP (NYSE:HPQ) announced financial results for its fourth fiscal quarter ended Oct. 31, 2007, with net revenue of $28.3 billion, up 15% from a year earlier and up 11% when adjusted for the effects of currency.
In the fourth quarter, GAAP operating profit was $2.6 billion and GAAP diluted earnings per share (EPS) was $0.81, up from $0.60 in the prior-year period. Non-GAAP operating profit was $2.8 billion, with non-GAAP diluted EPS of $0.86 up from $0.68 in the prior-year period. Non-GAAP financial information excludes $132 million of adjustments on an after-tax basis, or $0.05 per diluted share, related primarily to amortization of purchased intangibles. GAAP and non-GAAP financial information include all stock-based compensation expense in both current and prior-year periods.
"Strong performance across our businesses was highlighted by sharp improvement in our software segment," said Mark Hurd, HP chairman and chief executive officer. "We have added over $12 billion of new revenue this year. While we still have more work to do, HP is well positioned to make further progress in the marketplace."
Revenue in the Americas grew 10% on a year-over-year basis to
$11.9 billion. Revenue grew 19% in Europe, the Middle East and Africa
to $11.6 billion. Revenue grew 20% in Asia Pacific to $4.8 billion.
When adjusted for the effects of currency, revenue in the Americas
grew 9%, revenue in Europe, the Middle East and Africa grew 12%, and
revenue in Asia Pacific grew 14%. Revenue from outside of the United
States in the fourth quarter was 67%, with revenue in the BRIC
countries (Brazil, Russia, India and China) growing 37% over the
prior-year period and accounting for 9% of total revenue. Personal Systems Group Personal Systems Group (PSG) revenue grew 30% year over year to
$10.1 billion, with unit shipments up 31% on a year-over-year basis.
This fiscal year, PSG grew $7.2 billion in revenue. Notebook revenue
for the quarter grew 49% over the prior-year period, while desktop
revenue grew 15%. Commercial client revenue grew 24% year over year,
while Consumer client revenue increased 40%. PSG had exceptional
growth in emerging markets with more than 100% growth in China, its
third-largest market. Operating profit was $589 million, or 5.8% of
revenue, up from $336 million, or 4.3% of revenue, in the prior-year
period. Imaging and Printing Group Imaging and Printing Group (IPG) revenue grew 4% year over year to
$7.6 billion. On a year-over-year basis, supplies revenue grew 6%,
Commercial hardware revenue grew 5% and Consumer hardware revenue
declined 5%. Printer unit shipments increased 5% year over year, with
Consumer printer hardware units up 3% and Commercial printer hardware
units up 15%. Momentum in key growth initiatives continued, with
printer-based multi-function devices up 26%. Operating profit was $1.1
billion, or 14.5% of revenue, flat from the prior year period of $1.1
billion. Enterprise Storage and Servers Enterprise Storage and Servers (ESS) reported revenue of $5.2
billion, up 10% over the prior-year period. On a year-over-year basis,
industry-standard server revenue increased 14%, with x86 blade revenue
up 78%. Storage revenue grew 7%, with revenue growth of 6% in external
disk storage, including 17% in the midrange EVA line. Business
critical systems revenue increased 5%, with Integrity systems growth
of 59% offset by declines in PA-RISC and Alpha. Operating profit was
$693 million, or 13.5% of revenue, up from $502 million, or 10.7% of
revenue, in the prior-year period. HP Services HP Services (HPS) revenue increased 7% year over year to $4.4
billion. Revenue in Technology Services, Consulting and Integration,
and Outsourcing Services each grew 7% over the prior-year period.
Operating profit was $526 million, or 12.0% of revenue, up from $505
million, or 12.4% of revenue, in the prior-year period. HP Software 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. On a year-over-year basis, HP
OpenView grew 24% excluding Mercury. Operating profit was $177
million, or 25.4% of revenue, up from $60 million, or 17.2% of
revenue, in the prior-year period. Financial Services HP Financial Services (HPFS) reported revenue of $657 million, an
increase of 21% year over year. Financing volume and net portfolio
assets increased 23% and 15%, respectively, over the prior-year
period. Operating margin was 7.3% of revenue, up from 6.4% in the
comparable period last year. Asset management HP generated $3.6 billion in cash flow from operations for the
quarter. Inventory ended the quarter at $8.0 billion, down 4 days over
the prior year. Accounts receivable increased $2.5 billion over the
prior-year period to $13.4 billion, up 3 days over the prior-year
period. Accounts payable decreased $315 million over the prior-year
period to $11.8 billion. HP's dividend payment of $0.08 per share in
the fourth quarter resulted in cash usage of $206 million. HP utilized
$2.0 billion of cash during the fourth quarter to repurchase
approximately 42 million shares of common stock from the open market.
HP exited the quarter with $11.6 billion in gross cash, which includes
cash and cash equivalents of $11.3 billion, short-term investments of
$152 million, and certain long-term investments of $129 million. Full year fiscal 2007 Net revenue for the full fiscal year was $104.3 billion,
representing growth of 14%, or 10% when adjusted for the effects of
currency. GAAP operating profit was $8.7 billion and GAAP diluted EPS
was $2.68, up from $2.18 in the prior-year period. Non-GAAP operating
profit was $9.6 billion, with non-GAAP diluted EPS of $2.93 up from
$2.38 in the prior-year period. Non-GAAP financial information
excludes $690 million of adjustments on an after-tax basis, or $0.25
per diluted share, related primarily to the amortization of purchased
intangible assets, in-process research and development charges,
restructuring charges and pension curtailment gains. GAAP and non-GAAP
financial information include all stock-based compensation expense in
both current and prior-year periods. Outlook HP estimates Q1 FY08 revenue will be approximately $27.4 billion
to $27.5 billion. First quarter FY08 GAAP diluted EPS is expected to be $0.75, and
non-GAAP diluted EPS is expected to be $0.80. Non-GAAP diluted EPS
estimates exclude after-tax costs of approximately $0.05 per share,
related primarily to the amortization of purchased intangible assets. FY08 GAAP diluted EPS is expected to be in the range of $3.12 to
$3.17, and FY08 non-GAAP diluted EPS is expected to be in the range of
$3.32 to $3.37. FY08 non-GAAP diluted EPS estimates exclude after-tax
costs of approximately $0.20 per share, related primarily to the
amortization of purchased intangible assets. Also, HP announced that its board of directors has
authorized an additional $8 billion for future repurchases of shares
of HP common stock. HP estimates FY08 revenue will be approximately $111.5 billion.
