Richi Jennings

Economic GOOD NEWS from HP!

November 25, 2008 5:47 AM EST
In Tuesday's IT Blogwatch, Richi Jennings watches bloggers dissect HP's recent surprising performance numbers, offering praise and criticism of Mark Hurd's performance. Not to mention the $6 million "home theater"...

James Niccolai reports:
Mark Hurd (source: HP)Hewlett-Packard (HP) reported a 19% jump in revenue for the October quarter, lifted by its EDS acquisition and strong sales of laptop computers and blade servers. The company's printer and desktop PC businesses fared less well, however; Results from HP's enterprise hardware business were mixed.

Chairman and CEO Mark Hurd was upbeat about the results, saying HP's geographic reach and wide product portfolio are helping to shield it against the effects of the tough economy ... Despite the cautious outlook, Hurd sounded more confident on the call than the heads of some other big tech companies, notably Intel, Dell and SAP.
...
Revenue for HP's fourth fiscal quarter, ended Oct. 31, was $33.6 billion .. Net profit was $2.1 billion, down from $2.2 billion in the same quarter last year. Excluding one-time charges, net profit climbed 13% to $2.6 billion.more

Brandon Bailey adds:
The results were better than analysts had expected, amounting to a 2 percent drop in profit but a 19 percent surge in revenue compared with the same period in 2007.
...
Even while performing better than expected in the last quarter, Hewlett-Packard is girding for a tough economy in the year ahead ... the company acknowledged some effects of the recent economic slowdown. Revenue from laptop computers and business and tech services grew significantly in the last quarter, but sales of printers and some categories of computer servers were down.more

Eric Savitz finds good news here:
The company said revenue ex-EDS grew 5%, or 2% adjusted for currency ... [and] operating margins for the group increased to 15.5%, from 14.5%, which translated into an operating profit increase to $1.2 billion, from $1.1 billion.
...
For Q1, the company sees revenue of $32 billion to $32.5 billion, with profits of 93-95 cents a share. For the full year, HP sees revenue of $127.5 billion to $130 billion, with profits of $3.88 to $4.05 a share.more

Dean Takahashi agrees:
The surprising thing is that the world’s biggest information technology company left its guidance for the first quarter and the coming fiscal year unchanged, in spite of the economic doldrums.
...
HP is growing strongest in emerging countries such as Brazil, Russia, India and China — where revenue was up 23 percent from a year ago. Overseas revenue accounts for 68 percent of HP’s business.more

But Dawn breaks from the pack: [Groan -Ed.]
HP has sent a HUGE chunk (maybe close to 75%) of it’s work force overseas eliminating US jobs. He’s thrown his own crew overboard. USA HP sites in America are like ghost towns with maybe a fourth of the workers left, and there are threats for more workers to go. He’s given away American jobs to those overseas and people are hurting as a result. Engineers and technicians are out of work and can’t find work elsewhere in these tough economic times.

The only ones profitting are Hurd and his board of directors, and a few investors who can pick up some of the stock when it’s on an upswing. When will people begin to talk about all the American jobs lost to other countries overseas? Why aren’t people talking about how this is affecting our country, the economy and American’s lives?more

Jim Goldman looks beyond the numbers:
Mark Hurd's management style has turned HP's balance sheet upside down since he took over, squeezing far more profits out of every sale ... [but] something else is at work here.
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As the company talks about guidance for the first quarter and full year 2009, the company ... blames unfavorable currency exchange rates ... Not a sales slowdown. Not market softness. But currency conditions. That sends a powerful message ... the world's biggest PC maker doesn't seem to be tracking the kind of slowdown that so many market researchers have been pointing to these last few months.

Not only is that good news for HP, but Dell too. And Intel. And Microsoft. And so many others. That's a big of good news I don't think many analysts were counting on.more

Jon Fortt ink-wires: [You're fired -Ed.]
Where’s the most expensive popcorn in the universe? At the movie theater, of course. Theaters know you’ll pay because you’re a captive audience. That explains how Hewlett-Packard made so much money from ink sales last quarter, even though printer sales are slipping: by raising ink prices.

HP printer owners, after all, are themselves a captive audience ... helps us understand how HP CEO Mark Hurd managed to produce pretty good numbers on Monday ... and why he is comfortable promising Wall Street more of the same in a chaotic economy.
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Hurd has a lot of levers he can pull to hit its profit targets, even in times like these ... one must admire the profit-making flexibility that HP’s diverse business affords it. In this way it’s different from Dell ... or Cisco ... Even Apple and IBM, despite their broad variety of products and services, don’t match HP.more

And finally... Buffer overflow: Other Computerworld bloggers:
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Richi Jennings is an independent analyst/adviser/consultant, specializing in blogging, email, and spam. A 23 year, cross-functional IT veteran, he is also an analyst at Ferris Research. You can follow him on Twitter, pretend to be Richi's friend on Facebook, or just use boring old email: blogwatch@richi.co.uk.

Previously in IT Blogwatch: