HP&'s PC, Enterprise Business Fuel 3Q Growth

HP&'s revenues for its third quarter ended July 31 totaled $20.8 billion, compared with $18.9 billion a year earlier. Net income was $73 million, or 3 cents per share, down from the year-earlier figures of $586 million, or 19 cents per share. Earnings were affected by a one-time U.S. income tax provision of about $788 million on $14.5 billion repatriated to the United States from foreign operations.

HP&'s PSG results defied an earnings shortfall from Dell and saw operating profits reach $163 million, up from $23 million for the year earlier period. Revenues for the group reached $6.39 billion, up from $5.9 billion in the year-earlier period.

In a conference call with reporters, HP CEO and president Mark Hurd characterized PC demand as “steady and stable.”

For the first time, HP notebook revenue exceeded desktop revenue, HP said. Notebook revenue was up 21 percent year-over-year, while desktop sales declined by 3 percent.

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Hurd declined to reveal what percentage of HP&'s PC business or overall company sales were generated by the channel. “We continue to have high expectations of our ability to work with the channel,” he said in response to a question from CRN. “Some of our channel partners had good strong quarters. We are encouraged by that. As I&'ve said before, we are looking for the partners that really want to partner with HP and really focus with us in a big way and those are the ones we are going to spend a lot of effort with.”

Hurd did say that HP&'s performance in its Enterprise Storage and Servers business was aided by a stronger alignment with enterprise VARs. ESS operating profits jumped to $150 million compared to a $211 million loss in the comparable 2004 quarter. Revenue for the unit reached $4 billion, compared to $3.3 billion a year earlier.

HP&'s flagship Imaging and Printing Group saw revenue reach $5.9 billion for the period on 10 percent growth in unit sales compared to the third quarter of 2004. Operating profit, however, fell to $771 million from a year-earlier $836 million. Hurd said that HP aggressively priced its imaging products for unit growth during the quarter to help grow its supplies business. “We priced for that objective and that&'s what we got,” he said.