PALO ALTO, Calif. -- HP (NYSE:HPQ) today announced financial results for its first fiscal quarter ended January 31, 2011. Net revenue of $32.3 billion was up 4% from the prior-year period both as reported and in constant currency.
GAAP diluted earnings per share (EPS) was $1.17, up 26% from $0.93 in the prior-year period. Non-GAAP diluted EPS was $1.36, up 27% from $1.07 in the prior-year period. Non-GAAP financial information excludes after-tax costs of approximately $0.19 per share and $0.14 per share in the first quarter of fiscal 2011 and 2010, respectively, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges. Information about HP's use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.
"I'm pleased with our EPS and margin expansion during the quarter. Going forward, we have the opportunity to further capitalize on our customers' demands for higher value-added solutions," said Léo Apotheker, HP president and chief executive officer. "HP has a powerful portfolio, including exciting, recently announced cloud and connectivity offerings. We are focused on leveraging these strengths to extend our leadership and accelerate growth."
"HP's financial strength and discipline helped generate $3.1 billion in cash flow from operations, up 28% year over year," said Cathie Lesjak, HP executive vice president and chief financial officer.
Trends and regional performance
HP saw balanced growth in the first quarter across all regions in local currency, with accelerated growth in BRIC countries (Brazil, Russia, India and China). Results were largely driven by momentum in the commercial sector as businesses continued to spend on technology. HP experienced uneven consumer performance across its geographies and product categories during the quarter.
First quarter revenue was up 6% in the Americas to $14.4 billion. Revenue was flat in Europe, the Middle East and Africa and up 7% in Asia Pacific to $12.1 billion and $5.8 billion, respectively. When adjusted for the effects of currency, revenue was up 5% in the Americas, up 4% in Europe, the Middle East and Africa and up 2% in Asia Pacific. Revenue from outside of the United States in the first quarter accounted for 65% of total HP revenue, with revenue in the BRIC countries increasing 11% while accounting for 11% of total HP revenue.
Business group highlights
Personal Systems Group (PSG) revenue declined 1% year over year with a 6.4% operating margin. PSG delivered record operating profit in the quarter and remains the PC market leader in terms of units, revenue and profit share. The commercial refresh cycle continues, and HP saw 11% year-over-year revenue growth in Commercial Clients while revenue in Consumer Clients declined 12% in the quarter.
Imaging and Printing Group (IPG) revenue grew 7% year over year with a 17.0% operating margin. IPG delivered strong performance across the business with share gains in all printing categories and 33% year-over-year growth in commercial printer hardware units. IPG continued to drive innovation and momentum with the new ePrint platform, graphic arts and other commercial print solutions.
Services revenue declined 2% year over year with a 16.0% operating margin. Services operating margin expanded 30 basis points year over year due primarily to service delivery transformation efforts. Enterprise Services had solid long-term signings in the first quarter, the impact of which was partially offset by softer signings in shorter term, higher value-added services and add-on IT outsourcing projects.
Enterprise Servers, Storage and Networking (ESSN) revenue grew 22% year over year with a 14.7% operating margin. ESSN delivered a solid quarter, demonstrating increased value to customers as they transition to hybrid cloud environments through a converged infrastructure, including innovations in servers, storage and networking.
HP Software revenue grew 5% year over year with a 17.6% operating margin. HP Software expanded its security footprint with the integration of Fortify and ArcSight during the quarter.
Financial Services revenue grew 15% year over year with a 9.6% operating margin. Financial Services growth was driven by both double-digit growth in lease volume and a healthy improvement in portfolio assets.
Hewlett-Packard Co. (NYSE: HPQ)
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Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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