(Small) Itanium uptick
Business Critical Systems, which peddles Itanium-based machines, had a mere one per cent uptick, to $546m. HP's StorageWorks disk and tape storage business showed three per cent growth, to $980m.
HP Software, the place where Apotheker is obviously keen to boost revenues and profits, had a 17 per cent revenue jump in the second fiscal quarter, to $764m, with licenses representing about 35 per cent of that pie and growing at 29 per cent, year-on-year.
Support revenue was just under half of total software sales, and was up eight per cent. But operating earnings from HP Software fell by 7.8 per cent, to $154m, and you can bet that Apotheker is none too happy about that.
On the PC front, consumer PC sales fell 23 per cent, but corporate PC sales rose by 13 per cent. (HP does not provide revenues across these two customer segments.) HP's notebook sales across all customers were down 9 per cent, to just over $5bn, and desktop sales fell by four per cent, to $3.64bn.
Workstation sales are booming, up 28 per cent in the quarter, to $541m, and other devices accounted for $194m, down seven per cent. HP's overall PC sales came to $9.42bn, down 5.4 per cent, and despite all the bad news, operating earnings for Personal Systems Group rose by 14.5 per cent, to $533m.
To sum it up: HP is not going to spin out its PC business any time soon,
That leaves the bedrock Imaging and Printing Group, which makes the ink that is effectively cash in a plastic canister. IPG had $6.75bn in sales, up 5.5 per cent, and operating earnings of $1.14bn, up only 4.2 per cent. (Wall Street is nervous about that as well.) In the call, HP said that printer supply revenues rose by seven per cent, and total printer hardware units shipped in the quarter were up 12 percent. Both consumer and commercial printer units saw a four per cent bump in Q2, and color LaserJet sales were up 26 per cent and multi-function printers had a 60 per cent jump.
HP Financial Services, which is held separately from the other services units and which provides financing for HP's wares, had 885m in sales (up 17.2 per cent) and operating earnings of $83m (up 20.3 per cent). If you are working at HP and looking for a bonus and a place where the new boss is not going to scream at you, HP Financial Services is the place to be.
HP also updated its guidance this morning, and now says it expects sales of $31.1bn to $31.3bn in the third quarter and GAAP earnings per share of around 90 cents. For the full year, HP expects $129bn to $130bn in sales and GAAP earnings of $4.27 per share and non-GAAP earnings of $5.00 per share.
That's about $1bn to $1.5bn less revenue for fiscal 2011 than HP's latest revised forecast, and about $700m of that will hit in the second half of the fiscal year – about two thirds of it in the third quarter ending in July, according to Cathie Lesjak, HP's CFO.
That revenue decline is caused by reduced business in Japan, supply chain issues in Japan, and the consumer PC sales slowdown. ®
Still waiting for a strategy
The last time Leo spoke we saw a strategy to develop a strategy.
Now we see a company without a vision or a strategy. This reminds me of when Lou Gertsner took over IBM and said the last thing they need is a vision. But what he meant was he needed to remake the whole company...and he did. So what is Leo doing? Oracle has cut them off in the enterprise space. Their palm strategy dooms them to be left out of the tablet market. Printers and ink are facing increases competition as people realize HP charges more for black in than the cost of human blood.
We have written off HP. IBM is our preferred partner and Oracle is the partner we have to use. Oracle reminds me of CA from years ago. Maybe Larry will meet the same fate as the CA CEO.