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You are here: Home / Business Briefing / HP Cheers Market with Sales Growth
HP Cheers Uncertain Market with Sales Growth
HP Cheers Uncertain Market with Sales Growth
By Richard Koman / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
FEBRUARY
20
2008
As economic indicators continue to suggest the U.S. economy is headed for -- or is already in -- recession, Hewlett-Packard reported Tuesday that its first-quarter net revenue increased 13 percent from a year earlier.

"We are raising our guidance yet again, reflecting our confidence in anticipated cost reductions and share gains in key markets," said Mark Hurd, HP chairman and CEO. "We added more than 2,000 sales positions in the past year through acquisitions and hiring. HP remains well positioned for profitable growth as we continue to focus on our numerous cost initiatives and improve our market coverage."

HP's good news surprised analysts and suggested that there is hope for the economy. "Their guidance was much more bullish than we thought it would be, particularly with what we've seen out of Cisco," Brent Bracelin, an analyst with Pacific Crest Securities, told the Bloomberg financial news service. "Their outlook suggests that things aren't as bad as people thought."

Emerging Markets Lead the Way

Addressing analysts on the company's quarterly conference call, Hurd credited three factors with driving HP's earnings growth: "significant cost savings," additional sales resources and diversification around the globe and across product lines.

Indeed, it was strength in emerging markets that propelled HP's revenue growth. Revenue in the Asia Pacific region grew 22 percent to $4.9 billion, but only eight percent in the U.S. to $11.2 billion and 15 percent in Europe, the Middle East and Africa to $12.3 billion. Adjusted for currency fluctuations, growth in Asia was 16 percent compared to seven percent in the other regions. And in the BRIC countries -- Brazil, Russia, India and China -- revenue grew a whopping 35 percent.

"They are capitalizing on the international better than anyone else," said Jane Snorek of First American Funds in Minneapolis. "They're taking share from Dell and I think they're taking share from IBM, and I think that's going to continue."

Strong Growth for Notebooks

HP's Personal Systems Group, which sells notebook and desktop PCs, enjoyed 24 percent year-over-year growth. The results showed an accelerating movement in the industry toward notebooks, which grew 37 percent, while desktops grew 15 percent.

Consumer sales, with 29 percent growth, was marginally stronger than business sales, which grew 22 percent. "Our commercial business delivered strong revenue and margin performance, augmenting our strength in consumer, notebooks and emerging geographies," Hurd said.

HP's Technology Solutions Group enjoyed revenue growth of 10 percent, "driven by expense discipline," Hurd said, as well as investments in blade solutions, management software and data-center services. "I am pleased with our improved performance" in this area, Hurd said.

HP's mature printer and imaging business also grew, but more slowly, only 4 percent year-over-year to $7.3 billion. HP Services grew 11 percent to $4.4 billion.

Hurd noted the trouble in the economy but emphasized that HP "control(s) many of the levers that drive our performance." He said the company will "remove significantly more cost this year than we did last year" and that the cost savings will "fund investments that both improve the efficiency of HP and create growth opportunities."

Read more on: HP, Revenue, International
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