Hewlett Packard swallowed hard and took a tax adjustment of almost a billion dollars in its Q3 earnings announced today. HP's cash repatriation on foreign earnings will amount to $14 billion. The tax adjustment of $988 million was required by the American Jobs Creation Act.

Excluding the charge, however, HP would have recorded a net income of $1.06 billion on revenue of $20.8 billion, up 7 per cent and 9.9 per cent respectively from a year ago after currency adjustments.

The PC business saw its revenues increase, too, recording an operating profit of $163 million on $6.4 billion in revenue. The margins continue to be razor thin, at 2.6 per cent, but that's up from a year ago.

Services profits fell slightly year-on-year to $256 million on income of $3.8 billion. And storage and servers reported $4 billion of income and an operating profit of $150 million.

Wintel and Linux server sales grew 28 per cent, storage sales grew 15 per cent, and enterprise hardware sales grew 7 per cent year-on-year. Even HP-UX reported better figures, up 8 per cent on 2004.

Software continues to be HP's weakness, although losses in the group narrowed slightly to $40 million on revenue of $249 million. And HP's financing operation recorded profits of $58 million on earnings of $489 million

For the fiscal year to date HP reported net income of $3.21 billion on sales of $63.78 billion, and expects Q4 FY2005 revenue come within the range of $22.4 billion to $22.8 billion.

Restructuring and redundancies will cost $900 million in the coming quarter, offset by a one-time saving of $200 million from freezing the pensions - a very unpopular move with HP's staff. ®

Related stories

• HP halfway through cull - Hurd (16 May 2006)
• HP makes layoffs pay in Q4 (18 November 2005)
• Watch out IBM and Dell, warns HP (26 October 2005)
• High-end Unix servers resilient in Q2 (26 August 2005)
• HP Labs also decimated (22 July 2005)
• Emperor Hurd decimates HP (19 July 2005)
• HP boss on motivation, human capital, and staff retention (19 July 2005)
• Analysts circle HP with CEO's hammer expected to come down (23 June 2005)
• HP to drop 3,000 staff in fiscal '05 (9 June 2005)
• New HP CEO coasts through mediocre Q2 (17 May 2005)
• NCR's Q1 goes the way of the Hurd (29 April 2005)
• HP serves up bland post-Fiorina Q1 (17 February 2005)