HP makes layoffs pay in Q4
Hardware up but printing powerhouse slows
HP today proved that layoffs pay as it managed to squeeze bigger profits out of its hardware businesses during the fourth quarter. Overall, HP's results weren't too impressive, but they fell inline with analysts' expectations and pleased investors.
HP reported revenue of $22.9bn. That total marks a seven per cent year-over-year increase from the $21.4bn reported last year. Excluding charges, HP posted a solid 22 per cent rise in net income to $1.5bn from $1.2bn. Including a massive $1.1bn restructuring charge, HP's results weren't as pretty. It earned $416m – down 62 per cent year-over-year from $1.1bn.
For the full year, HP saw sales rise nine per cent to $86.7bn and net income drop to $2.4bn from $3.5bn.
"HP delivered another strong quarterly performance, with balanced revenue growth, good cost discipline, improved margins in key businesses and strong cash flow," said Mark Hurd, CEO at HP. "We are pleased with our progress to date, but there is more work ahead of us."
Hurd has adopted a pragmatic approach to HP's business and employee relations since taking over from Carly Fiorina as CEO. HP has fired 15,300 staffers during his reign.
On the financial front, this strategy has helped the PC and enterprise hardware divisions that struggled under Fiorina. The PC group saw revenue rise nine per cent to $7.1bn with unit shipments also rising 13 per cent. The group turned a tidy $200m profit up from $77m last year.
By comparison, Dell saw sales of PCs fall to $5.1bn from $5.2bn in its most recent quarter.
Server and storage revenue at HP jumped ten per cent year-over-year to $4.5bn. These groups were particularly hard hit by the job cuts. Overall, HP reported a profit of $405m from the hardware unit up from a profit of $100m.
Things turn more distressing in HP's vaunted printing and imaging business. For many years, this unit has carried HP, boosting the bottom line with huge profits. The IPG unit did increase revenue four per cent year-over-year to $6.8bn but saw its profit drop to $896m - down from $1.1bn last year. That's still a ton of cash, but HP can't be happy about the direction IPG's profits have taken in recent months.
HP's services group reported a revenue increase of six per cent to $3.9bn. The profit there, however, fell as well to $322m – down from $375m. Software revenue increased 11 per cent to $311m. The software unit reported a profit of $27m, which compares to a loss of $7m last year.
Employees may not be pleased with the job cuts, but investors sure seem to like them. HP's shares, which were stagnant under Fiorina, surged past the $30 mark in the after-hours markets for the first time since 2002. ®