HP hardware units climb into black

Hewlett-Packard has reported 10% year-on-year revenue growth in its fourth quarter, driven by higher revenue in all its major...

Hewlett-Packard has reported 10% year-on-year revenue growth in its fourth quarter, driven by higher revenue in all its major product groups.

Managed services were a particularly bright spot during the quarter, HP said, growing 36% year on year. After running in the red both last quarter and in the same quarter the previous year, the company's Personal and Enterprise Systems Groups returned to operating profitability. Only HP's financing unit posted a year-on-year revenue decline.

Net revenue for the quarter, ending 31 October, was $19.9bn.

HP cut 2,400 positions last quarter but added 4,400 new ones in growing areas such as managed services. The company also expanded its "low-cost" offshore outsourcing operations,. HP's cuts came in all geographies and will continue in the coming year.

HP's 2003 revenue was $73.1bn, up fractionally from the $72.3bn total HP said it would have reported in 2003 had it and Compaq operated as a combined company for the full year.

HP's Imaging and Printing Group was its strongest unit during the quarter, posting revenue of $6.2bn and operating profit of just over $1bn. In contrast, the Personal Systems Group brought in nearly as much revenue, $6bn, but had a profit of only $21m.

While the company's HP Services unit was one of its most lucrative, turning a profit of  $393m on revenue of $3.2bn, that market remains a fiercely competitive one, said HP chairman and chief executive officer Carly Fiorina, adding that industry capacity in the segment continues to outpace customer demand. 

HP expects its revenue to drop sequentially next quarter, to between $19.1bn and $19.5bn, in line with what the company described as its usual seasonal patterns. Company expenses will increase next year as HP begins paying its executives bonuses that have been skipped in recent years, executives warned analysts, but HP hopes increasing demand will offset its rising costs.

Fiorina characterised IT buyers as "cautiously optimistic" in their planned spending. The consumer market is picking up more quickly, she said. "Enterprises continue to be very tight with their purse strings. The enterprise environment is improving, but it is slight."

Stacy Cowley writes for IDG News Service

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