HP records quarterly profit

Buoyed by a sharp improvement in its software business, HP reported a quarterly profit on Monday.

The company reported net earnings of $US2.3 billion, or $0.86 per share, for the fourth quarter ending Oct. 31, compared to net income of $1.9 billion for the year-earlier quarter. Earnings beat the estimates made by Thomson Financial analysts, who projected net income of $2.184 billion and $0.82 earnings per share. The earnings are based on a non-GAAP (generally accepted accounting principles) basis.

HP recorded fourth-quarter net revenue of $28.3 billion for the quarter, a 15 per cent year-over-year increase.

The company took a $30 million charge related to licensing its manufacturing, distribution and design of HP cameras so that it can concentrate on its home photo printing and online photo services.

Net revenue for fiscal 2007 was $104.3 billion, a 10 per cent growth year-over-year. HP recorded operating profit of $9.6 billion.

The company's software revenue doubled year-over-year to $698 million, CEO and president of HP, Mark Hurd, said in a conference call following the earnings announcement. Hurd attributed the software rise partly to the acquisition of Mercury Interactive, which HP acquired for $4.5 billion last year.

Notebook revenue grew 49 per cent year-over-year, with more people using mobile devices to access digital content, Hurd said. The world is going mobile, especially in emerging markets, he said.

China is becoming a key market for HP, Hurd said. HP's Personal Systems Group, which sells PCs and notebooks, recorded a 100 per cent growth in China, making it the group's third-largest market. HP is selling products in around 400 Chinese cities with more expansion planned, Hurd said. Overall revenue in the emerging BRIC (Brazil, Russia, India and China) markets grew 37 per cent, Hurd said.

Hurd was pleased with 78 per cent growth in x86 blade servers revenue, he said. The Enterprise Storage and Servers group reported revenue of $5.2 billion, a 10 per cent increase over the previous year.

Despite steady growth across all segments, Hurd said there was more room to grow. "HP still has room to improve, but we like how we are positioned," he said.

The company estimates revenue for fiscal 2008 to be $111.5 billion.