HP beats expectations
Good results from software division boosts revenues
A strong performance from its software business played a key part in HP’s third-quarter results beating analyst expectations, with a rise in revenue of more than five per cent.
Sales rose to $21.9bn (£11.6bn), but growth was weakest in Europe, the Middle East and Africa at just three per cent.
Operating profit surged to $1.5bn (£791m) from just $73m (£38.5m) last year, when one-off tax charges relating to foreign income ate into the total.
‘All the main operating units reported growth, with the two extremes of HP Services recording only one per cent growth while software recorded 30 per cent growth,’ said Ovum analyst Eamonn Kennedy.
‘Software continues to extend its operating margin and has a strong long-term growth story, facilitated by acquisitions such as Peregrine and Mercury.’
Kennedy says that at a corporate level the results hit many of the right notes, as HP continues to enjoy a favourable performance against rivals IBM and PC market leader Dell.
‘Margin improvements, revenue growth, cash flow and a bolstered share price; there was more than enough good news to make for the chief executive’s favourite term of “another solid quarter”,’ he said.
‘On the other hand, there is HP Services. A backdrop of slow overall growth, a declining support business, and exiting of some contracts is beginning to undermine confidence.’
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