HP Printing Carries the Day

Hewlett-Packard Tuesday showed that its printing and imaging business is extremely valuable to its overall operations.

As part of its second quarter filing with the SEC, the Palo Alto, Calif.-based computer and printer maker reported a net income of $659 million, or 22 cents a share for the fiscal second quarter ended April 30. Revenue was $18.0 billion, compared with $17.9 billion in the first quarter. The results were in line with analysts’ expectations.

It was a little more than a year ago that HP finalized its merger with Compaq Computer. At the time, analysts and investors balked at HP CEO Carly Fiorina’s claims that the two companies could work together. Now the company says it has reduced structural costs by $3.5 billion on an annualized basis.

“Our business model is generating a more balanced revenue and profit mix, and our operating cash generation capabilities — more than $2.5 billion this quarter — are proving to be stronger than ever,” Fiorina said in a statement. “Today, HP emerges from the integration a stronger, bolder competitor with our sights set firmly on leadership and growth.”

Much of that success comes from its core Imaging and Printing group. HP says its $5.2 billion division grew 13 percent over last year, down 1 percent over the January filings but in line with what the group does during this time of year.

The company’s other bright spot was its $3.9 billion Enterprise Systems group. HP said the division grew 3 percent sequentially with nearly break-even results, and HP Services grew 2 percent sequentially with solid profits. Even though HP said its Personal Systems revenue was flat, it was better than defying seasonal trends, with sustained profitability.

On the dark side of the announcement, Fiorina continued her mantra that the economy is still in a soft spot. And while HP is looking at adding 4,000 positions at the expense of cutting 3,500 more jobs later this year. Fiorina was not specific on which groups would get the brunt of the ax.

Around the world, HP saw growth everywhere but in the Americas, which makes up $8.1 billion in sales or 45 percent of its revenue. The company’s second largest sales area, Europe, grew 1 percent to $7.1 billion. Asia-Pacific remains a growth area tapping out at 2 percent growth to $1.9 billion. The company said it was pleased Japan recovered from a weak first quarter to grow 7 percent sequentially to $795 million in revenue.

HP also said the rest of the year would match Wall Street consensus estimates of $36.4 billion in revenue and $0.62 in non-GAAP earnings per share.

But even with a better balance sheet, the company is not completely out of the woods just yet. Rivals IBM and Dell Computer are also showing strong revenue growth.

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