Dell Who? HP CEO Says Dell's Retail Push Had No 3Q Effect


By Scott Campbell, ChannelWeb

4:41 PM EDT Tue. Aug. 19, 2008
Hewlett-Packard hasn't experienced any disruption in sales from the increased retail presence of Dell and other competitors, HP CEO Mark Hurd said Tuesday.

"There's a lot of guys out there. It's a competitive market. We're doing the best we can and we feel our numbers show up well right there," Hurd said during a 15-minute conference call to discuss the company's third fiscal quarter earnings.

HP's sales increased 10 percent in the fiscal quarter ended July 31, including a 15-percent increase from the company's Personal Systems Group (PSG).

"We're very pleased with our performance in PSG," Hurd said. "When you look what's happening, you've got a lot of places around the planet where the only access to digital content is through a laptop and wireless card. We have a significant opportunity there. We do our best to take advantage of it. We have to deploy great products, world class support."

Overall, HP earned $2.03 billion, or 80 cents per diluted share, on sales of $28.03 billion. In the year-ago quarter, the company earned $1.78 billion or 66 cents per diluted share. Analysts were expecting earnings of 81 cents per share on sales of $27.41 billion, according to Thomson Financial.

HP software was the biggest sales winner for the company, increasing 29 percent to $781 million, led by 32 percent in the Business Technology Optimization portfolio.

HP Services and Financial Services also showed double-digit sales increases, 14 percent and 17 percent, respectively.

The Personal Systems Group again accounted for the largest slice of revenue, $10.3 billion for the quarter. PSG unit shipments increased 20 percent. Notebook revenue grew 26 percent over the prior-year period. Desktop sales increased 6 percent. Commercial client revenue grew 15 percent, year-over-year.

Hurd declined to elaborate on an unstable market environment, saying that HP didn't see much change in Q3 compared to Q2. He said the company's success in the quarter was due more to a strong execution from within, rather than a "material change" in the environment.

"We saw accelerating local currency growth in the Americas and in the U.S. I would not necessarily take that as a market trend. Our execution in the quarter was good," he said.

Hurd added that HP's acquisition of EDS is expected to close this quarter, with the ensuing revenue bump to have a big impact across the company.

"We are every excited about growth opportunities for HP and EDS. We think we can accelerate our reach into key enterprise accounts. The vast majority of customers that I talk to speak of the combined power of HP innovation and EDS's scaled services business," Hurd said.

For the current fiscal quarter ending in October, HP expects sales between $30.2 and $30.3 billion and diluted shares between 95 cents and 97 cents, or $1.01 to $1.03 on a non-GAAP basis. Analysts were predicting net income of $1 per share on $30.22 billion in sales.

Shares of HP closed at $43.69 Tuesday, down 91 cents or 2 percent per share.

 
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