HP sees profits surge

HP's fourth-quarter financial results have capped off a year of dramatic improvements in profitability, led by solid quarters from just about every business unit.

HP said net income for its fiscal fourth quarter, ended 31 October, rose to $1.7bn, or 60 cents per share, up from $416m, or 14 cents per share, in the same period last year. Revenue climbed seven per cent to $24.6bn. The company took a massive charge in last year's fourth quarter to pay for the layoffs of more than 15,000 employees.

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Not counting some additional restructuring costs, profits per share were 68 cents, above estimates of analysts polled by Reuters Estimates and Thomson First Call. For the full year, HP recorded a profit of $6.2bn, a 158 per cent increase over last year's $2.4bn in net income. Revenue was $91.7bn, up about six per cent, compared with $86.7bn last year. Profits per share were $2.18, a 166 per cent increase over last year's 82 cents per share.

HP CEO Mark Hurd said on a conference call with reporters following the release of the numbers: "This is our most balanced performance in recent memory." The company enjoyed solid performances from its businesses both by operating segment and by geography, he said.

HP's PC business continued to improve its operating margins during its fourth quarter. Operating profit for the group was $336m, up from $200m a year ago. Revenue increased 10 per cent compared with last year, led by laptop revenue which was up 24 per cent.

Revenue from consumer PC purchases was up 19 per cent, while commercial growth was just four per cent, in line with broader industry trends seen throughout the year. HP regained the top spot in the PC market during the quarter, on the strength of the consumer-focused back-to-school shopping season. Dell, the previous leader, is more dependent on revenue from corporate PC purchases than HP.

That also means that HP usually has an advantage over its rival heading into the end-of-year holiday shopping season. Right now, Hurd said he wasn't completely sure what to expect from the upcoming season, given the lack of Microsoft's Windows Vista operating system, but he said that the company otherwise expects a normal holiday period.

On the enterprise technology side, the company's enterprise storage and servers group posted a four per cent increase in revenue to $4.7bn. Profits were $502m, up 24 per cent, compared with $404m a year ago. Revenue from servers based on Intel and AMD's x86 processors was up nine per cent but networked storage revenue grew just one per cent.

Reuters contributed to this report

Tom Krazit writes for CNET News.com