HP's Q4 Profits Decline On Restructuring Charges

For the period ended Oct. 31, HP earned $416 million, or 14 cents per share, compared with a profit of $1.1 billion, or 37 cents per share, in the same period last year. Sales increased 7 percent, to $22.9 billion from $21.4 billion.

Excluding special items, the company earned $1.5 billion, or 51 cents per share, compared with $1.2 billion, or 41 cents per share, in the same period last year.

HP president and CEO Mark Hurd said in a conference call that the company had solid revenue growth during the quarter. "But clearly we have work ahead," he said.

He said during the call that HP layoffs had reached 15,300, some 800 more than the company had predicted when it announced its restructuring plan last July. Hurd said that the 14,500 figure was an estimate.

Hurd declined to say what percentage of HP's fiscal 2005 revenues of $86.7 billion came from channel partners, but he reiterated that HP intends to put "more energy, not less" behind solution providers who are willing to make a greater commitment to HP. Based on those tighter bonds, Hurd said, "We hope to grow [channel] revenues in 2006."

Hurd said that Personal Systems Group (PSG) revenue grew 9 percent over the year earlier quarter to $7.1 billion with unit shipments up 13 percent. He said desktop revenue was up 1 percent, while notebook revenue jumped 23 percent over fourth quarter 2004.

PSG reported an operating profit of $200 million compared to $77 million for the year earlier period. Hurd said he couldn't explain why HP had a relatively strong quarter in its PC business while rival Dell experienced difficulties. "We tried to build a plan and execute on it," he said.

HP's Enterprise Storage and Servers unit (ESS) reported revenue of $4.5 billion for the period, up 10 percent from the year earlier period. Industry standard server revenue grew 12 percent, while networked storage revenue climbed 17 percent. ESS reported an operating profit of $405 million for the quarter, compared to $100 million for fourth quarter 2004.

Imaging and Printing Group (IPG) operating profit fell to $896 million for the period, down from $1.1 billion a year earlier. IPG revenue was $6.8 billion, up 4 percent from the year-earlier period. Color laser printers and enterprise multifunction printers were bright spots with unit shipments up 41 percent and 83 percent respectively.