HP Ups Revenue Outlook Despite Storage Concerns

Hewlett-Packard, buoyed by a strong fiscal first quarter, raised its full-year guidance, but the departure of a key ESS Americas sales executive, exacerbated solution providers concerns over HP's storage business.

HP Chairman and CEO Mark Hurd said in a conference call with reporters that HP, based on anticipated cost savings and share gains in key markets, was raising its fiscal 2008 revenue estimates to between $113.5 billion and $114 billion. HP had originally anticipated fiscal 2008 revenue of $111.5 billion.

HP reported sales of $28.5 billion for its fiscal first quarter ended Jan. 31, up 13 percent from a year-earlier $25.1 billion. Earnings for the period reached $2.1 billion compared to $1.5 billion for first quarter 2007.

Just prior to the earnings call, CMP Channel learned that Mark Gonzalez, HP's Americas vice president of Enterprise Storage and Servers, was leaving the company. HP solution providers in recent weeks have expressed concerns about gaps in HP's storage lineup, a problem they said was prompting them to seek stronger ties with NetApp, EMC and even Dell.

When asked if Gonzales' departure signaled any change in HP's Americas ESS sales strategy, Hurd said, "You're down to a pretty good level of detail. As we've talked before, Americas is an important market for us, the U.S. in particular. We want to have a broader footprint in the U.S. and I think some people look at it as good news that it's not as big a percent of our revenue portfolio as others. It's not that we don't want to be more aggressive in the U.S. We do. We want to use a continuum of channel partners to be able to help us get that done. We have made changes, not just recently, but over the past couple of years to do that. We'll continue to work very hard with our partners. We'll continue to work very hard with our partners and work very hard with our demand creation capabilities to grow in the U. S. It's very important to get that done."

Hurd said that HP generated 69 percent of its total revenue outside the U.S. and noted that the Americas was the slowest growing geographic region. He noted that Asia Pacific grew 22 percent year over year, Europe the Middle East and Africa was up 15 percent, and Americas revenues increased 8 percent.

ESS reported revenue of $4.8 billion for the quarter, up 9 percent from a year earlier, fueled primarily by an 81 percent in blade server sales, HP said. Storage revenues grew 10 percent during the quarter, with a 14 percent increase in the midrange EVA storage line.

HP U.S. enterprise solution providers, however, report that HP isn't competing well against NetApp and EMC in the market, with several reporting flat sales in their enterprise storage business.

Personal Systems Group revenue jumped 24 percent to $10.8 billion, buoyed by a 37 percent increase in notebook revenue. Imaging and Printing Group revenue grew 4 percent to $7.3 billion, with consumer unit sales down 2 percent and commercial printer hardware units up 13 percent. Software revenue grew 11 percent to $666 million led by 19 percent growth in HP's Business Technology Optimization portfolio.

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