HP to focus more on software

November 23, 2010

, NEW YORK, Nov 22 – Hewlett-Packard plans to increase its focus on software, new chief executive Leo Apotheker said Monday, as the US computer giant posted fourth quarter results that topped Wall Street\’s expectations.

HP said net profit rose five percent in the fourth quarter of its financial year to 2.5 billion dollars while revenue was up eight percent to 33.3 billion dollars, better than the 32.75 billion dollars expected by analysts.

The Palo Alto, California-based HP, the world\’s largest computer maker, reported diluted earnings per share of 1.10 dollars in the quarter compared to 99 cents during the same period a year ago.

"HP proved once again that it is able to execute given its market strengths and technology leadership," said Apotheker, who took over as HP\’s president and chief executive on November 1 after former CEO Mark Hurd\’s abrupt resignation.

HP said revenue increased 10 percent in the Americas to 15.1 billion dollars and was up six percent in Europe, the Middle East and Africa to 12.4 billion dollars. Revenue rose eight percent in Asia-Pacific to 5.8 billion dollars.

HP said it expected revenue of 32.8 billion dollars to 33.0 billion dollars in the current quarter.

HP shares were up 3.05 percent at 44.50 dollars in after-hours trading.

Revenue from HP\’s services business rose 0.4 percent in the quarter to 9.0 billion dollars while revenue from its storage and servers business for the enterprise market was up 25 percent to 5.3 billion dollars.

Software revenue increased one percent to 974 million dollars.

Apotheker, the former chief executive of German business software giant SAP, said in a conference call with reporters that he planned to increase emphasis on software.

"We all feel we need to have a strong and viable software business," he said. "It is true that today software represents roughly three percent of our revenue but I think we can do a lot better.

"Doubling it wouldn\’t be too bad, tripling it would be even better but that would be a very, very, very longterm projection," he said.

"With software we can add a lot of value in our strengths to whatever we do for our customers. That doesn\’t mean we would be in any type of software business," he said. "We have focus in our software strategy."

HP said revenue rose four percent to 10.3 billion dollars at its Personal Systems Group, which makes desktop, notebook and other computers. Notebook revenue was down three percent while desktop revenue increased 13 percent.

HP said commercial client revenue rose 20 percent while consumer client revenue was down 10 percent.

Revenue was up eight percent to 7.0 billion dollars at HP\’s imaging and printing group.

In the conference call with reporters, Apotheker referred only briefly to the case filed against SAP by rival Oracle in a California court.

"Given the strength and momentum of our business and our strong competitive position in the industry a competitor has tried to distract us — and you — from the good work being done across HP\’s business," he said.

Oracle had been seeking to have Apotheker testify in the case, in which Oracle has accused an SAP subsidiary of stealing Oracle software, but was reportedly unable to serve him with a subpoena.

Apotheker said he had been travelling constantly since taking up his new position at HP, meeting with company employees and partners.

"I\’ve been from California to Massachusetts to Germany to Singapore with many stops in between," he said.

Asked by a reporter where he was right now, Apotheker replied: "That\’s a bit of an odd question. I\’m on a media call focused on our fourth quarter in Palo Alto at HP\’s headquarters together with a bunch of people.

"Would you like a picture?" he asked.

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