HP Posts Strong Quarter

Hewlett-Packard Co. (NYSE: HPQ) today announced a strong set of second-quarter results, buoyed by good blade server performance.

The Palo Alto, Calif.-based company reported record revenues of $20.1 billion, up 12 percent on the same period last year.

HP's shares were up 33 cents (1.66%) from $19.50 to close at $19.83.

HP's non-GAAP operating profit was $1.3 billion, up 17 percent year-over-year. Non-GAAP earnings per share were 34 cents, also up 17 percent. GAAP operating profit was $1.1 billion, up 77 percent year-over-year, whereas GAAP EPS were 29 cents, up 32 percent compared to the same period last year.

The company's Enterprise Storage and Servers group reported revenues of $4 billion, up 8 percent year-over-year led by 15 percent growth in standard servers.HP CEO Carly Fiorina told analysts that blade servers had played their part. She said, "Sales of Proliant blade servers were the fastest-growing category – more than double a year ago."

Storage revenue for the quarter was $897 million – down 1 percent year-over-year, but up 7 percent sequentially. Fiorina attributed this to continuing declines in tape revenue and discounting in the midrange.

Software reported quarterly revenue of $222 million, an increase of 23 percent year-over-year. However, the company reported an operating loss of $49 million, thanks to a number of recent acquisitions.

Over the last few months, for example, HP has acquired specialist software vendors Consera, Novadigm Inc., and Trulogica to support its Adaptive Enterprise Strategy, which uses IT to support business change.

Both the GAAP and non-GAAP earnings include a $70 million charge for HP's settlement of a contract dispute with the Canadian government. Last week, HP announced that it was paying out $105 million to resolve the dispute over IT contracts at Canada's Department of National Defense.Details on what exactly happened are still emerging – although, in a statement released Friday, HP said that it is planning to take "appropriate steps" to recover the funds from "individuals and companies who were involved in a scheme to misappropriate funds from the Government of Canada and HP Canada."

Fiorina reiterated this message during the earnings call. She said, "We intend to take legal action to recover the funds from the appropriate parties."

— James Rogers, Site Editor, Next-gen Data Center Forum