HP reports record revenues, closes in on IBM

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HP reports record revenues, closes in on IBM

Palo Alto (CA) – Hewlett-Packard (HP) today delivered a strong fiscal Q1 2007 result. Driven by a surge in notebook sales, the company reported an increase of 11% in sales, which came in at $25.1 billion – about 5% below of IBM’s $26.3 billion.

Hewlett-Packard continues to delight the financial community with double-digit growth in revenues and earnings. Compared to fiscal Q1 2006, net profit made a 31% jump from $1.4 to $1.8 billion. For several quarters, HP has been closing the revenue gap to IBM and may be able, if growth percentages at HP and IBM remain stable throughout the year, to compete with IBM over the title of the world’s largest IT company.

IBM recently reported Q4 revenues of $26.3 billion on 7% annual growth. Total revenue for the year topped $91.4 billion. HP today said that it estimates its 2007 revenue to land between $98 and $99 billion – or about the same range that is estimated for IBM. However, while HP may be able to match revenues, IBM has a clear lead in profitability. Compared to HP’s profits of $1.8 billion, IBM was able to rake in more than $3.5 billion in its most recent quarter.

HP’s fiscal Q1 was driven by a solid performance of the personal systems group, which accounts for 34% of the firm’s revenues. HP said that notebook sales were up 40% year over year; units were up 57%. Desktop computer revenues declined by 1% on 3% higher units.

HP’s printer group achieved 28% of HP’s total revenue and reported an 18% increase in shipments. HP services accounted for 16% of HP’s sales and the company’s server group for 18%.

HP stock lost about $0.43 or about 1% in after hour trading on Tuesday.