Hewlett-Packard (HPQ): No Surprises, Pleasant Or Otherwise

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Hewlett-Packard (HPQ) had spoiled any surprise about its earnings by telegraphing the numbers weeks ago.

It made good on its promises.

HP posted financial results for its fourth fiscal quarter ended Oct. 31, 2008 with net revenue of $33.6 billion, up 19% from a year earlier. In the fourth quarter, GAAP operating profit was $2.7 billion and GAAP diluted earnings per share was $.84, up from $.81 in the prior-year period.

Guidance was also as strong as expected:

For the first fiscal quarter of 2009, HP expects revenue of approximately $32.0 billion to $32.5 billion, GAAP diluted EPS in the range of $.80 to $.82, and non-GAAP diluted EPS in the range of $.93 to $.95. Q109 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.13 per share, related primarily to the amortization of purchased intangibles.

For the full fiscal year 2009, HP expects revenue of approximately $127.5 billion to $130.0 billion, GAAP diluted EPS in the range of $3.38 to $3.53, and non-GAAP diluted EPS in the range of $3.88 to $4.03. FY09 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $.50 per share, related primarily to the amortization of purchased intangibles.

HP Services looked like the big winner with revenue up 88% to $8.6 billion, but that increase was due to the buyout of EDS.

The star was the company’s software operations which posted a revenue increase of 13% to $855.

On the disappointing side of the numbers, HP’s server and printer divisions both posted fractional drops in revenue compared to the same quarter last year. It would appear that the enterprise market is starting to slip away.

Douglas A. McIntyre