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Monday, November 24, 2008

Hewlett Packard (HPQ) reports

A little better than the preannouncement. Notebooks a bigger chunk of the mix. Desktops down y/y. The EDS acquisition added a lot to services -- they were up 99% with EDS and up 10% without it.

HP makes most of their money in printers. From the release:

Imaging and Printing Group

Imaging and Printing Group (IPG) revenue declined 1% to $7.5 billion. Supplies
revenue grew 9%, while Commercial hardware revenue and Consumer hardware revenue
declined 10% and 21%, respectively. Printer unit shipments decreased 8%, with
Consumer printer hardware units down 8% and Commercial printer hardware units
down 9%. Operating profit was $1.2 billion, or 15.5% of revenue, versus $1.1
billion, or 14.5% of revenue, in the prior-year period.

It will be interesting to hear whether channel inventories of supplies went up (they probably did) and what they have to say about printers leading ink in terms of forward visibility. Also its worth noting that the revenue includes a currency benefit -- the overall company grew 16% in constant currency but 19% with the benefit. Presumably that means in constant currency the imaging unit was worse than down 1%.

I'm not a big fan of HP though their big advantage is they sell a captive consumable (ink). Of course, people can and will print less in a recession... but they'll hold up better than some others because of it.

More after the call.

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