HP Expects Strong Q4

HP's fourth quarter earnings announcement is scheduled for November 24, but the preannouncement is seen as a step to calm jittery investors in an uncertain economic climate.

HP gave no details on specific product segments or geographies but said its revenue for the period ending Oct. 31 reached $33.6 billion, a 19 percent jump over year-earlier sales. For the year, net revenue was up 13 percent to $118.4 billion. The sales figures exclude the impact of HP's recent acquisition of EDS.

Solution providers said their HP business remains relatively strong. "The third quarter was a little slow, but the fourth quarter has picked up nicely," said Larry Holzenthaler, executive vice president of sales and marketing at Total Tec Systems, an Edison, New Jersey HP solution provider. "Financial services is still slow, but we are doing very well with blades."

Holzenthaler said law firms and state government IT spending appears to be unaffected by the recession so far this year.

"Our ability to execute in a challenging marketplace differentiates HP, enabling it to increase share, expand earnings and emerge from the current economic environment as a stronger force," HP CEO Mark Hurd said in a statement. HP, however, was cautious about its 2009 fiscal first quarter. The company expects an unfavorable year-over-year impact of approximately 5 points for its first quarter and a 6 to 7 point impact for the full year. HP expects first quarter revenues to reach $32 billion to $32.5 billion compared to first quarter 2008 revenues of $28.5 billion.

One cloud of uncertainty that hangs over HP's channel business in 2009 is how successful the vendor is in transitioning its PartnerOne rebate money from a focus on sales growth toward a competency specialization model for its partner certifications. In the past, HP focused on product certifications, but is quickly moving to solution specializations around specific verticals and technologies such as data protection, security, communications or virtualization.

Some enterprise solution providers say their HP PartnerOne rebate money is down by more than 50 percent year to date compared with the previous year. As a result, some previously HP exclusive solution providers are exploring new relationships with EMC and even Dell. But others say HP is on the right track in switching to a solutions-based rebate model.

"That limits some of the things you can do [the decline in growth rebates]," said one solution provider who asked not to be identified. "But we haven't gotten the money from the solutions elite program yet, and that could make up quite a bit of the shortfall."