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Thursday, 28 November 2013 00:00 - - {{hitsCtrl.values.hits}}
Revenue from the sprawling enterprise group, which Chief Executive Meg Whitman is focused on expanding as personal computer sales crumble globally, climbed 2%, aided by a 10% rise in server sales and 3% growth of the networking business.
Wall Street had low expectations for HP following a disappointing third-quarter performance, and after rivals such as International Business Machines Corp (IBM) and Cisco Systems Inc. had reported poor results.
Better fourth quarter
The pickup in enterprise hardware revenue in the fiscal fourth quarter coming after a 9% slide in sales from the same division in the previous three months helped shore up confidence in Whitman’s turnaround effort.
“I saw better-than-expected performance out of the enterprise group, which we expected to be weak given the results from peers such as IBM and Cisco,” said Edward Jones technology analyst Bill Kreher. “There is some hope, given that the company was able to jump over what was admittedly a pretty low hurdle.”
He cautioned, though, that any signs of a turnaround will remain uneven.
But the company’s operating margins eroded. Non-GAAP operating margin slipped to 9% in the quarter from 10.4% a year earlier, reflecting aggressive competition from rivals such as Dell Inc and Lenovo Inc.
Revenue stability in 2014
Whitman, who took the helm of the world’s largest PC maker more than a year ago, is trying to wean the Silicon Valley icon off sales of personal computers. Last month, she told Wall Street she expects revenue to stabilise in 2014, with some areas of growth for the company.
With the help of job cuts and expansion into markets and areas with longer-term potential such as enterprise computing services, the CEO is trying to revive growth.
Revenue fell across most of HP’s business divisions except the enterprise group, whose sales edged up to $ 7.6 billion. Sales from HP’s largest, PC-focused unit slipped 2% to $ 8.58 billion while the printing division’s sales dipped 1% to $ 6.04 billion.
HP faced an aggressive pricing environment and a tough global economy but there were “some bright spots in Asia and in some of our emerging markets,” she added. The company’s performance in China is in stark contrast to the warning of weakness in the region from rival Cisco and sales declines for IBM.
