HP’s Q2 profit up, margins rise due to non-US demand
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HP Reported Second Quarter 2008 results today. Highlights from the quarter are as follows - net revenue up 11%, or $2.7 billion, from a year earlier to $28.3 billion , GAAP operating profit up 22% to $2.6 billion; $0.80 earnings per share, up from $0.65 a year earlier and non-GAAP operating profit up 22% to $2.8 billion, $0.87 earnings per share, up from $0.70 a year earlier
“HP turned in another strong quarter, supported by improvement across our businesses. With 70 percent of revenue now coming from outside the U.S., we benefited from robust demand in emerging economies,” said Mark Hurd, HP chairman and chief executive officer. “The company’s financial outlook demonstrates its strength in the global marketplace.”
Revenue in the Americas grew 4% on a year-over-year basis to $11.1 billion. Revenue grew 16% in Europe, the Middle East and Africa to $11.9 billion. Revenue grew 16% in Asia Pacific to $5.2 billion. When adjusted for the effects of currency, revenue in the Americas grew 2%, revenue in Europe, the Middle East and Africa grew 6%, and revenue in Asia Pacific grew 7%.
Revenue from outside of the United States in the second quarter was 70% of the total, with revenue in the BRIC countries (Brazil, Russia, India and China) growing 26% over the prior-year period and accounting for 10% of total revenue. This has helped HP despite a slowing US economy and fears of recession in the United States.
Outlook for rest of 2008
HP estimates FY08 revenue will be approximately $114.2 billion to $114.4 billion, up from previous guidance of $113.5 billion to $114.0 billion.
FY08 GAAP diluted EPS is expected to be in the range of $3.30 to $3.34, and FY08 non-GAAP diluted EPS is expected to be in the range of $3.54 to $3.58. FY08 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.24 per share, related primarily to the amortization of purchased intangibles.
Despite strong results and increasing outlook for the rest of FY08, HP’s stock was down about a percent.
HP recently surprised investors by announcing a $13.2 billion acquisition of services company EDS.
