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HP floats Q4 profit on services biz

Everything else takes a swim

Gartner critical capabilities for enterprise endpoint backup

Hewlett-Packard's profits grew 14 per cent in the fiscal fourth quarter, boosted by corporate cost-cutting and solid performance by its enormous services unit.

The vendor's successes helped offset major losses in revenue in just about everything that's not services, including consumer PCs; enterprise storage and servers; software; and printing.

For the quarter ended October 31, HP reported a net profit of $2.4bn, versus $2.1bn in Q4 2008. Net revenue was $30.8bn, down eight per cent from the same period last year.

Of all HP's operations, only services and - to a much smaller degree- financial services saw an increase in revenue during the quarter. Revenue in the services biz rose eight per cent to $8.9bn. During an investor conference call Monday, HP chieftain Mark Hurd said the acquisition of EDS last year has provided an "enormous asset" the company is just beginning to leverage.

Meanwhile, earnings from HP's bread-and-butter personal systems group declined 12 per cent, to $9.86bn. The drop in revenue came despite an increase of unit shipments of eight per cent during the quarter. It was enough to maintain the vendor's leading market share in PCs worldwide, but the market's love for small and cheap computers took a big bite out of HP's margins.

Following the trend was Enterprise Storage and Servers dropping 17 per cent to $4.2bn. HP Software declined 16 per cent to $967m. Imaging and Printing fell 15 per cent to $6.45bn.

Hurd said several times during the investor powwow that HP is in the process of "reinvigorating" its printing business and that it will be in much better shape going into 2010. In addition to pushing print-on-demand kiosks in places like Walmart, Tesco, and K-Mart Australia, the company will invest into areas such as wireless printing and multi-function printers.

Looking globally, HP's overall revenues decreased three per cent in the Americas. Asia Pacific fared better with a one per cent drop. Europe, Middle East, and Africa revenues took a 17 per tumble.

For the first fiscal quarter of 2010, HP estimates revenue of between $29.6bn and $29.9bn. Looking further into its crystal ball, HP predicts full-year 2010 revenue will be between $118bn to $119bn, up from previous estimates topping out at $118bn. But those estimates don't include the impact on its business from buying 3Com, HP said. ®

Gartner critical capabilities for enterprise endpoint backup

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