HP shows more success in PCs, servers and storage than in printers

Hewlett-Packard is off to a great start for 2008, on the whole, turning in first quarter results that show growth across PCs, storage, servers, and most other product categories.

But surprisngly, revenues from printers -- traditionally the mainstay of HP's business -- actually showed a drop of two percentage points in consumer unit sales from the beginning quarter of 2007.

"HP delivered a strong first quarter," maintained HP CEO Mark Hurd, during a financial conference call held last night which detailed HP's revenue gain of 13% year-over-year to $28.5 billion for the quarter. "We had balanced growth and profitability across all regions and gained share in key market segments," Hurd told analysts.

In the call, Hurd and HP CFO Cathie Lesjak highlighted the growth figures across a number of specific markets, including increases of 24% for Personal Systems, 9% for Enterprise Storage and Servers, 17% for HP Financial Services, and 22% for commercial client revenue in the enterprise and mid-market arenas.

In addition, unit shipments rose 49% for PC laptops and 15% for desktop PCs and workstations.

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Unit shipments also shot up 13% for HP's laser printers, according to Hurd, who suggested that sales slides on the printer side was due to some missed sales opportunities for dot matrix printers.

"We could have done better than we did, and just to be very blunt, I'm not real happy about it," he said.

Even then, HP's Deskjet printer line did inch up one percentage point in terms of worldwide unit sales, according to the CEO.

But acknowledging that the supplies revenues generated by printer sales are very important to HP's business, Hurd said "there is more work for us yet to do" on printer sales.

Through increasing diversification, however, HP's business model seems to be shifting somewhat away from the company's historic reliance on printers above all else, and PCs as a second linchpin.

"No tech company is immune to a tech spending slowdown, but HP has the most customer and geographic diversity in our group," according to David C. Bailey, an analyst at Goldman Sachs. In a client note, Bailey wrote that HP "continues to have multiple economically idendepent cost cutting levers, which give its earnings greater resiliency in a weaker macro environment."

In terms of HP's consumer markets, Hurd told financial analysts that, "in the US, at the end of the quarter, we saw a little more caution [than] we've seen in the past."

Like other major systems vendors, including IBM and Microsoft, HP is now placing a big emphasis on sales in emerging markets.

"Emerging geographies accounted for hearly half of the PC units shipped in the mark and over 60 percent of growth," Hurd admitted during the call.

In any event, on stock exchanges, HP's strong first quarter results spurred price jumps today in share prices for HP and tech stocks in general.

By early afternoon today, HP stock value had gained 7 points on the New York Stock Exchange, reaching $47.37 per share.

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