HP Profits Stabilize But IPG Takes Hit

Jon Robinson
August 20, 2009

With a 42 percent drop in the shipment of commerical printing hardware, HP's Imaging and Printing Group (IPG) saw revenues decline by 20 percent in the third quarter (ending 31 July) to US$5.7 billion. Operating profit for IPG, however, remained stable at US$960 million when compared to a profit of US$1 billion in the same quarter last year.

HP's total revenues for the third quarter of this year came in at US$27.5 billion, which is a two percent drop from the year earlier. “HP’s performance this quarter is a result of our strong business portfolio, efficient cost structure and scale,” said Mark Hurd, HP CEO. “Business is stabilizing, and we are confident that HP will be an early beneficiary of an economic turnaround and will continue to outperform when conditions improve.”

In Europe, the Middle East and Africa, revenue dropped 12 percent to US$9.9 billion, while it increased by eight percent in the Americas region to US$12.6 billion. Revenue from outside of the United States in the third quarter accounted for 62 percent of total revenues, with revenues in the BRIC countries (Brazil, Russia, India and China) declining six percent over the prior-year period, while accounting for 10 percent of total HP revenues.

Pointing to the completion of its EDS acquisition, HP noted record record profit in its Services division (US$1.3 billion), while revenue in this division increased 93 percent to US$8.5 billion. “Record profit in Services, double-digit revenue growth in China, and solid cash flow demonstrate HP’s ability to execute,” said Cathie Lesjak, HP CFO. The company saw an revenue decrease of 22 percent in its software sales, while the 20 percent decline in IPG was emphasized by a 13 percent drop in supplies revenue.

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