HP: Fiscal 1Q10 Financial Results

HP announced financial results for its first fiscal quarter ended Jan. 31, 2010, with net revenue of $31.2 billion, up 8% from a year earlier and up 5% when adjusted for the effects of currency.

Enterprise Storage and Servers
(without services)

(in $ millions)	1Q09	4Q09	1Q10
Revenues	3,949	4,218	4,391
Y/Y growth		-17%	11%
Earnings from operations	406	481	552

Storage only (without services)

(in $ millions)	1Q09	4Q09	1Q10
Revenues	913	918	889
*Q/Q growth*	-20%	11%	-3%
Y/Y growth	-7%	-20%	-3%

Enterprise Storage and Servers (ESS) reported total revenue of $4.4 billion, up 11%. Storage revenue declined 3% with the midrange EVA product line down 5%.

Comments

Abstracts of the earnings call transcript

Cathie Lesjak, CFO:

"Enterprise Storage and Server revenue was $4.4 billion, up 11% compared with the prior year, and up 4% sequentially, well ahead of normal seasonality. The ESS results were driven by strong performance in ISS, which increased its revenue by 27% from the prior year. The strength in ISS was partially offset by storage and business critical systems, which experienced year-on-year decline of 3% and 22%, respectively."

Question from David Bailey, Goldman Sachs:

"And then moving onto your storage business, it seems to be lagging some of your other ESS categories. Are there initiatives you have underway there to jump start that business?"

Answer by Mark Hurd, chairman and CEO:

"We have our top guys working on it. So, I think for us, we think again there is going to be a pretty strong convergence in the server and storage market. We think there is a move towards more internal storage, away from external storage, which we think strategically really benefits the position we have in the server market. And we had a very strong quarter in the left hand product line, very strong. So, there’re elements within storage that we actually feel quite good about. As I said, we got pretty strong push strategically on getting this lined up across the entire ESS product line as well as within storage itself."

Question from Keith Bachman, Bank of Montreal:

"And then, Mark, just to follow-up on the EVA side or storage more broadly, I guess."

Answer by Mark Hurd:

"I think again we feel good, if you look at our segments, you got multiple segments. You got the high-end of storage, you got the mid range and then I hate to call up the low-end, but it’s the lower tiers and more industry standard part of storage. And what you have for us is really strong growth in the industry standard part of storage. Very mediocre performance in the mid range that we think we can improve and then not a lot of growth in the high-end. And we think that reflects market trends as well that you got to get, we got to get more of our offering into that industry standard part of the market and have more coverage in relationship to that part of the market."