HP has announced that its revenues for the first quarter of 2007 were $25.1 billion, representing an 11% year-on-year growth. The results have created a piece of history, which will probably only be noticed by analysts and HP itself, as it became the first IT company to record more than $10 billion in revenues in the EMEA region in a quarter.
Previously, IBM in Q4 2004 came within $6 million of breaking this revenue landmark – the actual figure recorded by HP was $10.7 billion.
The results by HP showed that EMEA was its biggest market, representing 43%, with the Americas (which includes Canada and Latin America) contributing 41%, and Asia Pacific (APAC) making up the remaining 16%.
These results show that HP is still very reliant upon its core markets for its revenue, but APAC recorded a 15% year-on-year increase, and if the currency fluctuations are removed from these figures, the APAC performance is still an impressive 12% year-on-year growth, while in the EMEA region, the headline growth of 14% is reduced to approximately 7% if these currency fluctuations are discounted. Revenue in the Americas continued to show a slowdown from a 10% year-on-year figure as of Q1 2006 to 6% year-on-year growth in Q1 2007.
The analysis by market segment shows that HP’s personal systems group (PSG) accounted for 34% of the market share, and this demonstrated a 17% year-on-year growth figure. According to HP, this increase was driven by its campaign in the consumer space with the PC is personal advertisements; the consumer space revenues were up 28% year-on-year compared to commercial revenues that were up only 8% year-on-year in the PSG segment. The other major contributor to growth in the PSG segment is the shift from desktop, revenues down 1% year-on-year, to notebook, revenues up 40% year-on-year.
The next biggest contribution in terms of revenue came from the imaging and printing group (IPG) with 28% of the revenues, driven by strong growth in printer sales that were up 18% year-on-year. The enterprise storage and servers (ESS) division contributed 18%, driven by blade sales that were up an impressive 45% year-on-year. HP services represented 16%, with the remaining 4% being split between financial services and software.
The software figure showed a dramatic 81% year-on-year growth. However, most of this can be attributed to the Mercury acquisition made in 2006. Additionally, HP announced the formation of a third division, business information optimization, under its software segment, which signals that it is serious about increasing its software business. HP is likely to make more software-focused acquisitions in 2007 to increase the revenue from this segment.
HP’s balance in terms of geographic revenue performance seems biased towards EMEA and the Americas, but it is showing signs of becoming more even as its growth in the APAC countries continues. The balance in terms of market segment still demonstrates HP’s heritage as a hardware vendor, with a combined 80% of revenues from PSG, ESS, and IPG. The services segment, with 16%, shows that HP has made some moves towards balancing its revenues, but with only 2% from software it has more to do to diversify.
Source: OpinionWire by Butler Group (www.butlergroup.com)