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HP prints its way to profit in Q1

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HP's first quarter proved that printing and imaging products drive the company's growth but also that other parts of its business can chip in at times.

HP reported $19.5bn in revenue for the period ended January 31. This is a nine per cent rise year-on-year and matches guidance given last week by HP. The operating profit gains were more impressive, as HP showed a 30 per cent rise to $1.1bn in profit.

"HP delivered a solid quarter," said Carly Fiorina, HP's chairman and chief executive officer. "In a seasonally weak period we demonstrated HP's earnings potential with our most balanced profit performance since the merger.

HP's imaging and printing unit pulled in $5.9bn in revenue for the first quarter and contributed a stunning $968 million to the operating profit total. Both the revenue and profit increased six per cent year-on-year.

But printing profits from HP are hardly a surprise. Investors have been more interested in HP's hardware and PC businesses to see if they could keep up recent momentum.

The hardware group did its bit, growing revenue five per cent to $3.9bn. The group also posted a $108m profit, which is a massive $190m improvement over the same quarter a year ago. Intel-based servers lead the gains, while Unix sales slowed. Both storage and software were also up in the quarter.

The personal systems or PC unit pumped out $6.2m in revenue and an operating profit of $62m in the quarter. That total sets a quarterly profit record for HP since it acquired Compaq.

HP was pleased with these results, but they still do not stack up too well against rival Dell. In its fourth quarter, typically a much stronger period than Q1 as in HP's case, Dell posted net income of $749m, almost purely on PC, server and storage sales. This compares to just $170m from the comparable units at HP.

And away from hardware, HP did not fair as well in its first quarter. The company saw its services unit pull in $3.2bn in revenue - a six per cent year-on-year rise. The group's operating profit, however, fell 11 per cent to $258m. HP's financial services business also slumped, as revenue dropped 15 per cent to $441m.

For its second quarter, HP expects revenue between $19.2bn and $19.6bn. ®

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