Computer and printer maker Hewlett-Packard Co. (HPQ) said Monday after the markets closed that its fourth quarter profit rose 14% from last year, as cost cuts helped improve margins and offset an 8% decline in revenue. The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue. At the same time, the company raised its revenue and earnings guidance for the fiscal year 2010.
The Palo, Alto, California-based company reported GAAP net income for the fourth quarter of $2.4 billion or $0.99 per share, compared to $2.1 billion or $0.84 per share for the year-ago quarter.
The latest quarter results include after-tax costs related mainly to the amortization of purchased intangibles, restructuring charges and acquisition-related charges of $0.15 per share, compared to $0.19 per share in the year-ago quarter.
Excluding items, non-GAAP net income for the fourth quarter was $2.8 billion or $1.14 per share, compared to $2.6 billion or $1.03 per share in the prior year quarter.
On average, 30 analysts polled by Thomson Reuters expected the company to earn $1.13 per share for the fourth quarter. Analysts' estimates typically exclude special items.
GAAP operating margin for the fourth quarter improved to 10.2% from 8.2% a year ago, while non-GAAP operating margin increased to 11.8% from 10.1% last year.
HP, which is the world's largest technology company, said net revenue for the fourth quarter fell 8% to $30.78 billion from $33.60 billion in the same quarter last year. Fourth quarter revenue grew 11.6% sequentially. Twenty-nine analysts had a consensus revenue estimate of $30.36 billion for the fourth quarter.
Results were in line with the preliminary figures the company released earlier this month.
Fourth quarter revenue in the Americas fell 3% year-over-year to $13.6 billion, while revenue in Europe, the Middle East and Africa dropped 17% to $11.7 billion and Asia Pacific revenue declined 1% to $5.4 billion.
Fourth quarter revenue from the company's international business constituted 64% of the total revenue. Revenue from the so-called emerging markets of Brazil, Russia, India and China fell 4% over the prior year period and accounted for 10% of total revenue. China revenue for the quarter jumped more than 20%.
Fourth quarter revenue from HP's Personal Systems Group fell 12% year-over-year to $9.9 billion, with unit shipments up 8%. Notebook revenue for the quarter declined 8%, while Desktop revenue dropped 16%. HP is the world's largest PC maker. It had taken the world PC lead from Dell in 2006.
According to market research firm Gartner, Inc. (IT), worldwide PC shipments increased in the third quarter by 0.5% year-over-year to 80.9 million units.
HP continued to lead the worldwide PC market with market share of 19.9%, followed by Acer with 15.4% market share and Dell with 12.8% market share, Gartner said. However, Dell was the top PC vendor in the U.S., the world's largest PC market, in the third quarter, with a market share of 26.2%.
In its preliminary fourth quarter forecast, Gartner said Monday that it expects worldwide PC shipments will total 298.9 million units in 2009, a 2.8% increase from 2008. The forecast is more optimistic than Gartner's final September forecast, which anticipated a 2% decline in shipments for 2009.
HP's Imaging and Printing Group, the company's cash-cow, posted revenue of $6.5 billion for the fourth quarter, down 15% from a year earlier. For the fourth quarter, supplies revenue fell 8%, while commercial hardware revenue declined 32% and consumer hardware revenue dropped 17% compared to a year ago. Printer unit shipments were down 20% during the fourth quarter. This should be a worrying factor for the company.
The company's Enterprise Storage and Servers group generated fourth quarter revenue of $4.2 billion, a decrease of 17% from the comparable year-ago quarter.
After Cisco Systems, Inc. (CSCO) announced its entry into the server market, HP is under added pressure as International Business Machines Corp. (IBM) and HP lead that market.
Also, Round Rock, Texas-based Dell Inc. (DELL) has introduced a line of server models in a bid to lure businesses away from IBM and HP. Dell is also planning to raise it sales in the Chinese market, which accounts for at least 5% of the company's global business.
HP's services revenue for the fourth quarter rose 8% year over year to $8.9 billion, boosted mainly by the acquisition of Electronic Data Systems Corp. HP said the integration of EDS is tracking ahead of plan.
The company's software revenue for the fourth quarter fell 16% from a year earlier to $967 million, while financial services revenue rose 5% to $726 million.
During the fourth quarter, HP repurchased about 46 million shares of its common stock for $2.1 billion and ended the quarter with $13.4 billion in gross cash.
In a regulatory filing on Monday, the company said its Board of Directors on November 19 authorized an additional $8.0 billion for future repurchases of its outstanding shares of common stock. As of October 31, HP had about $4.0 billion of share repurchase authorization remaining under the $8.0 billion repurchase authorization approved by the board in September 2008.
For the fiscal year 2009, the company reported GAAP net income of $7.7 billion or $3.14 per share, compared to $8.3 billion or $3.25 per share for the fiscal year 2008.
Non-GAAP net income for the the fiscal year 2009 was $9.4 billion or $3.85 per share, compared to $9.3 billion or $3.62 per share in the prior fiscal year.
Net revenue for the the fiscal year 2009 fell 3% to $114.55 billion from $118.36 billion last year.
Analysts expected the company to earn $3.82 per share on revenue of $113.91 billion for the fiscal year 2009.
"HP's solid performance in Services drove record profit, and the accelerated pace in signings creates strong momentum going into 2010," said Mark Hurd, chairman and chief executive officer, HP. "Our operational execution and improving cost structure generated strong quarterly and year-end results. We expect to outperform the market due to our significant scale, broad portfolio and market-leading position."
HP reiterated its first quarter guidance which calls for revenue of $29.6 billion to $29.9 billion, GAAP earnings of $0.90 to $0.92 per share and non-GAAP earnings of $1.03 to $1.05 per share. Analysts currently expect the company to earn $1.04 per share on revenue of $29.70 billion for the first quarter.
For the fiscal year 2010, the company said it now expects revenue of $118.0 billion to $119.0 billion, GAAP earnings of $3.65 to $3.75 per share and non-GAAP earnings of $4.25 to $4.35 per share. Previously, the company expected revenue of $117.0 billion to $118.0 billion, GAAP earnings of $3.60 to $3.70 per share and non-GAAP earnings of $4.20 to $4.30 per share.
Analysts currently expect the company to earn $4.31 per share on revenue of $119.06 billion for the fiscal year 2010.
Earlier this month, HP made its foray into the networking equipment market by striking a deal to buy 3Com Corp. (COMS) for about $7.90 per share in cash or an enterprise value of about $2.7 billion in a serious challenge to Cisco. The deal is indicated to close in the first half of 2010 and is expected to be slightly dilutive to the company's fiscal 2010 non-GAAP earnings.
Rival Dell last week reported a 54% drop in third quarter profit, as revenue dropped and margins shrank amid global market share loss and weak corporate demand. The company reported third quarter net income of $337 million or $0.17 per share, a sharp decline from $727 million or $0.37 per share reported for the year-ago quarter. Revenue for the third quarter dropped 15% to $12.90 billion from $15.16 billion in the same quarter last year.
HP shares, which are trading in a range of $25.39 to $51.43 over the past year, closed Monday's regular trading session at $51.02, up 98 cents or 1.96%. The stock is currently losing 22 cents in after hours trading.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.