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PCs, ink, servers - just about everything boosts HP's Q3

Enjoys top revenue rise since 2000

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HP did its double-digit thing during the third quarter with software and PC gains boosting the bottom line.

The company's workmanlike - yeah, we used it - quarter resulted in a 16 per cent year-over-year rise in revenue to $25.4bn. Net income surged as well, rising 29 per cent to $1.8bn. That's a healthy chunk of change.

"We had our strongest revenue growth since 2000," said HP's CEO Mark Hurd, during a conference call.

Hurd didn't say a whole lot right after that, as HP's phone line to reporters and analysts died. After about five minutes, his Hurdness returned, saying "Telephonic technology has not quite caught with the opportunity here."

And here we thought the market for earnings conference calls was already well taken care of. But we digress.

HP's revenue and units grew in every year region. The company noted that it received a boost from low component costs and cited strong, broad demand for its sparkling third quarter.

HP's Personal Systems Group - the PC folks - grew revenue 29 per cent year-over-year to $8.9bn. As expected, notebooks did most of the hard work, as sales jumped 54 per cent. Desktop sales increased 12 per cent. All in all, PSG posted a $519m profit - up from $275m in the same period last year.

The Imaging and Printing unit boosted revenue 8 per cent to $6.8bn and turned in a $981m profit, up from $884m.

The server and storage teams did their part as well, hiking revenue 10 per cent to $4.5bn. Sales of x86 servers rose 16 per cent aided by a very robust 81 per cent rise in blade sales. Sales of Itanium servers rose 71 per cent, although high-end system sales dropped 3 per cent overall as PA-RISC and Alpha system sales continued to disappear. Meanwhile, storage revenue increased 6 per cent. Together, the server and storage group turned in a $464m profit - up 7.2 per cent.

The software group - aided by a string of acquisitions - upped revenue 74 per cent to $554m. This unit's profit came in at $81m - up from $13m last year.

HP's core services business grew revenue by 8 per cent to $4.2bn and posted a $430m profit, up from $364m. Financial services rose 12 per cent to $582m.

If you're looking for a big downside to the quarter, you won't find one.

Analysts, however, did try and go negative by asking Hurd if HP expects to be hurt by the recent turmoil in the US financial markets.

HP? Slowdown because of a wobbly US economy? Pah.

"We saw steady growth across all regions and all segments," Hurd said. "I don't have any data that would indicate to me any material change in demand."

Hurd also noted that he's not an economist.

"We have a lot more work to do at HP," Hurd said, returning to his favorite refrain. "We are anything but a finished product at this point."

HP is all about cutting more costs, improving its software business and selling the heck out of gear during its often large fourth quarter.

The company expects fourth quarter revenue to come in between $27bn and $27.2bn.

Shares of HP rose slightly in after-hours trading, following the release of the third quarter results.

Overall, we find an HP that's changed quite a lot. The company used to depend on the printing and imaging unit for its best quarters. Now, however, revenue and profits are well spread across all of the major businesses. Software remains the only real division that needs serious help, and HP has vowed to acquire its way into success there. ®

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