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Hewlett Packard (HP)’s Q1FY12 revenues, at USD30.0bn, were down 7%
YoY (down 8% in CC YoY) and below Street estimate of USD30.7bn.
Operating profit stood at USD2.0bn vs Street estimate of USD2.5bn.
Operating margin was at 6.8% (10.5% in Q1FY11).Within the business
segments, services grew 1.1% YoY while ‘enterprise servers, storage and
networking’ (ESSN), ‘personal systems group’ (PSG) and ‘imaging and
printing group’ (IPG) declined 10.4%, 15.1% and 7.0%, respectively, YoY.
On the macroeconomic front, the company stated that although there are
signs of improvement in the US, customers are investing cautiously while
they still are concerned about Europe.
Services business turnaround to take time
The service business continues to grow slowly and was up 1.1% YoY (down 6.5% QoQ).
Margins too have declined over the past four quarters from 16.2% in Q1FY11 to 10.5% in
Q1FY12. Within the service segment, ITO and technology services were up 1.6% and 1.9%,
respectively, while application was down 0.3%, YoY. Management has highlighted the
company’s growing focus on moving from low‐margin business to services around cloud,
analytics and security, as well as apps modernization which are relatively high margin.
Pricing, investments continue to hit margins
In services, management stated that almost all contracts for renewal are coming at a
lower price, which is straining margins. The company also attributed the decline in
margin to investments it has been making in hiring additional head count in sales and
service delivery systems. With pricing remaining under pressure and further
investments in sales and delivery, and in new areas like cloud, analytics, etc margins are
likely to continue the downward trend in the coming quarters
Other highlights
Operating margin in ESSN, PSG, and IPG stood at 11.2%, 5.2% and 12.2% versus 14.8%,
6.4% and 16.6% in Q1FY11, respectively.
In terms of geo split, reported revenues were down 9% in America, 12% in EMEA and
10% in APAC, YoY. On constant currency basis, America's, EMEA and APAC revenues
were down 8%, 5% and 12%, respectively, YoY.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hewlett Packard (HP)’s Q1FY12 revenues, at USD30.0bn, were down 7%
YoY (down 8% in CC YoY) and below Street estimate of USD30.7bn.
Operating profit stood at USD2.0bn vs Street estimate of USD2.5bn.
Operating margin was at 6.8% (10.5% in Q1FY11).Within the business
segments, services grew 1.1% YoY while ‘enterprise servers, storage and
networking’ (ESSN), ‘personal systems group’ (PSG) and ‘imaging and
printing group’ (IPG) declined 10.4%, 15.1% and 7.0%, respectively, YoY.
On the macroeconomic front, the company stated that although there are
signs of improvement in the US, customers are investing cautiously while
they still are concerned about Europe.
Services business turnaround to take time
The service business continues to grow slowly and was up 1.1% YoY (down 6.5% QoQ).
Margins too have declined over the past four quarters from 16.2% in Q1FY11 to 10.5% in
Q1FY12. Within the service segment, ITO and technology services were up 1.6% and 1.9%,
respectively, while application was down 0.3%, YoY. Management has highlighted the
company’s growing focus on moving from low‐margin business to services around cloud,
analytics and security, as well as apps modernization which are relatively high margin.
Pricing, investments continue to hit margins
In services, management stated that almost all contracts for renewal are coming at a
lower price, which is straining margins. The company also attributed the decline in
margin to investments it has been making in hiring additional head count in sales and
service delivery systems. With pricing remaining under pressure and further
investments in sales and delivery, and in new areas like cloud, analytics, etc margins are
likely to continue the downward trend in the coming quarters
Other highlights
Operating margin in ESSN, PSG, and IPG stood at 11.2%, 5.2% and 12.2% versus 14.8%,
6.4% and 16.6% in Q1FY11, respectively.
In terms of geo split, reported revenues were down 9% in America, 12% in EMEA and
10% in APAC, YoY. On constant currency basis, America's, EMEA and APAC revenues
were down 8%, 5% and 12%, respectively, YoY.
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