HP defies economic slide with strong fourth quarter

Hewlett-Packard reported a sharp increase in fourth quarter revenue and expects a profitable fiscal 2009 despite a gloomy global economic scene.

Hewlett-Packard saw a sharp increase in fourth quarter revenue and expects a profitable fiscal 2009 despite a gloomy global economic scene.

HP, the world's largest computer manufacturer, released its preliminary financial results Tuesday and is due to release full results next Monday.

Fourth quarter revenue came in at 33.6 billion, a 19 percent year-over-year increase, or 16 percent after adjusting for currency fluctuations, HP said. Preliminary GAAP earnings per share were US$0.84.

HP said unfavorable currency exchange rates will likely drag down its fiscal 2009 revenue by five percentage points in its first quarter and six to seven percentage points over the year. The U.S. dollar has gained strength as of late against currencies such as the euro and British pound.

Still, fiscal 2009 doesn't look to be the disaster for HP that other technology companies are expecting with lower IT spending.

HP is expecting revenue between US$32 billion to US$32.5 billion for its first quarter, with GAAP earnings per share between US$0.80 to US$0.82.

For the full fiscal 2009, HP said revenue should be between US$127.5 billion to US$130 billion. GAAP earnings per share should be between US$3.38 to US$3.53.

HP's preliminary figures would seem to indicate that its acquisition and integration of services giant EDS may be starting off well, said Ed Thomas, a business process outsourcing analyst with Datamonitor. HP closed the US$13.9 billion deal in August.

But the integration of EDS with HP will be a long process, and it may be 12 to 18 months before a clear picture emerges, Thomas said.

In a weak economy, companies tend to look to outsourcing to reduce costs, which would favor a boost in the need for HP's services, Thomas said. Competitors such as Accenture and IBM Global Services have seen double-digit revenue growth, he said.

EDS will add more heft to HP's services offering, which brought in US$16.6 billion in revenue in 2007. In 2007, EDS brought in US$22 billion in revenue.

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Jeremy Kirk

IDG News Service
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