- Record quarterly revenue of $21.6 billion, up 7% year-over-year
- Non-GAAP operating profit of $1.3 billion, $0.37 earnings per share
- GAAP operating profit of $1.2 billion, $0.33 earnings per share
- Cash flow from operations of $2.4 billion
PALO ALTO, Calif., May. 17, 2005 - HP today reported financial results for its second fiscal quarter ended April 30, 2005. Second quarter revenue increased 7% year-over-year to $21.6 billion.
Non-GAAP(1) operating profit was $1.3 billion, with non-GAAP diluted earnings per share (EPS) of $0.37, up from $0.34 in the prior-year period. Non-GAAP diluted EPS and non-GAAP net earnings for the second quarter reflect a $107 million adjustment on an after-tax basis, or $0.04 per diluted share. GAAP operating profit for the second quarter was $1.2 billion. GAAP diluted EPS was $0.33 per share, up from $0.29 in the prior-year period.
Q2 FY05 Q2 FY04 Y/Y
Revenue (billions) $21.6 $20.1 7%
Non-GAAP Operating Margin(1) 6.1% 6.7%
GAAP Operating Margin 5.4% 5.7%
Non-GAAP diluted EPS(1) $0.37 $0.34 9%
GAAP diluted EPS $0.33 $0.29 14%
"HP had a solid quarter," said Mark Hurd, HP chief executive officer and president. "We grew revenue 7%, non-GAAP earnings per share rose 9% and we generated $2.4 billion in cash flow from operations."
"Nevertheless, our overall performance leaves room for improvement in many of our businesses. We expect to provide details as soon as our plans are finalized that will move us toward that objective."
During the quarter, on a year-over-year basis, revenue in Europe, the Middle East and Africa grew 10% to $9.1 billion, in Americas grew 4% to $8.8 billion and in Asia Pacific grew 9% to $3.6 billion. On a consolidated basis, when adjusted for the effects of currency, second quarter revenue grew 4% year-over-year.
Personal Systems Group
Personal Systems Group (PSG) revenue grew 6% year-over-year to $6.4 billion, with unit shipments up 12%. On a year-over-year basis, desktop revenue increased 1% and notebook revenue grew 10%. Revenue for commercial clients, which includes workstations, grew 3% over the prior-year period, while consumer clients revenue grew 10%. PSG reported an operating profit of $147 million, or 2.3% of revenue, up from a profit of $44 million in the prior-year period.
Imaging and Printing Group
Imaging and Printing Group (IPG) posted quarterly revenue of $6.4 billion, up 5% year-over-year. On a year-over-year basis, consumer hardware revenue increased 3%, with unit shipments up 13%. Commercial hardware revenue grew 8%, with unit shipments up 12%. Color laser unit shipments increased 96% year-over-year and MFP shipments increased 61%, reflecting continued momentum in key growth initiatives. Supplies revenue grew 4%. Operating profit was $814 million, or 12.7% of revenue, down from a profit of $952 million in the prior-year period. This reflects $71 million in workforce reduction costs, hardware pricing actions, hardware growth and mix shifts within supplies.
Enterprise Storage and Servers
Enterprise Storage and Servers (ESS) reported revenue of $4.2 billion, up 6% over the prior-year period. On a year-over-year basis, industry-standard server revenue increased 12%, business-critical systems (BCS) revenue grew 2% and networked storage revenue was down 6%. Within BCS, revenue in HP Integrity servers grew 37% year-over-year and HP-UX revenue grew 9%. ESS reported operating profit of $184 million, or 4.4% of revenue, up from a profit of $119 million in the prior-year period. Included in the quarterly results is $24 million in workforce reduction costs.
HP Services
HP Services (HPS) revenue grew 14% year-over-year to $4.0 billion. On a year-over-year basis, Managed Services revenue grew 27%, Technology Services grew 11% and Consulting and Integration grew 10%. Operating profit was $292 million, or 7.3% of revenue, down from a profit of $332 million in the prior-year period. Included in the quarterly results is $74 million in workforce reduction costs.
Software
Software reported quarterly revenue of $277 million, an increase of 23% year-over-year, with revenue in HP OpenView and HP OpenCall increasing 36% and 4%, respectively. Software reported an operating loss of $6 million, compared with a loss of $52 million in the prior-year period.
Financial Services
HP Financial Services (HPFS) reported revenue of $544 million, up 16% year-over-year. Finance volume, a leading indicator of future revenue, grew 4% over the prior-year period, and net portfolio assets grew 2% year-over-year to $7.1 billion. Operating profit was $58 million, or 10.7% of revenue, up from a profit of $35 million in the prior-year period.
Asset management
Inventory ended the quarter at $6.5 billion, down $656 million sequentially and up $191 million year-over-year. Accounts receivable increased $601 million sequentially and $736 million over the prior-year period to $9.3 billion. HP's dividend payment of $0.08 per share in the second quarter resulted in cash usage of $233 million. In addition, HP utilized $618 million of cash during the second quarter in connection with stock repurchases. HP exited the quarter with $14.5 billion in gross cash, which includes cash and cash equivalents of $14.4 billion and short- and certain long-term investments of $0.1 billion.
Outlook
HP estimates Q3 FY05 revenue will be in the range of $20.3 billion to $20.7 billion, with non-GAAP earnings per share in the range of $0.29 to $0.31. This excludes after-tax costs of approximately $0.03 per share from amortization of purchased intangible assets and approximately $100 million, or $0.03 per share, in workforce reductions.
More information on HP's quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP's Investor Relations website at www.hp.com/hpinfo/investor/.
HP's Q2 FY05 earnings conference call is accessible via an audio webcast at this location.
(1) All non-GAAP numbers have been adjusted to exclude certain items. A reconciliation of specific adjustments to GAAP results for this quarter and the prior periods is included in the table below titled: "Non-GAAP Consolidated Condensed Statements of Earnings." A description of HP's use of non-GAAP information is provided under "Use of Non-GAAP Financial Information."
Over HP
HP is wereldwijd leverancier van technologische oplossingen voor consumenten, bedrijven en instellingen. Het HP aanbod omvat producten en diensten voor een totale IT infrastructuur, personal computing en imaging en printing oplossingen. Over de laatste 4 kwartalen eindigend op 30 april 2005, behaalde HP wereldwijd een omzet van $83,3 miljard. Meer informatie over HP is te vinden op www.hp.nl.
Contactpersonen voor
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of
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Perlita Fränkel
023 562 82 08
perlitaf@monogram.nl
Hewlett-Packard Nederland
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