In the fourth quarter, GAAP operating profit was $2.7 billion and GAAP diluted earnings per share (EPS) was $0.84, up from $0.81 in the prior-year period. Non-GAAP operating profit was $3.4 billion, with non-GAAP diluted EPS of $1.03, up from $0.86 in the prior-year period. Non-GAAP financial information excludes $482 million of adjustments on an after-tax basis, or $0.19 per diluted share, related primarily to amortization of purchased intangible assets, restructuring charges, acquisition-related charges and in-process research and development charges.
“HP capped off a strong year by delivering another solid quarter led by strength in our services segment and disciplined expense management,” said Mark Hurd, HP chairman and chief executive officer. “Our global reach, broad portfolio, numerous cost initiatives and consistent execution differentiate HP in the current economic environment.”
Information about HP’s use of non-GAAP financial information is provided under “Use of non-GAAP financial information” below. Unless otherwise noted, all growth rates included in the narrative below reflect year-over-year comparisons.
Revenue grew 17% in the Americas, 22% in Europe, the Middle East and Africa and 14% in Asia Pacific to $14.0 billion, $14.1 billion and $5.5 billion, respectively. When adjusted for the effects of currency, revenue grew 17% in the Americas, 15% in Europe, the Middle East and Africa and 12% in Asia Pacific. Revenue from outside of the United States in the fourth quarter accounted for 68% of total revenue, with revenue in the BRIC countries (Brazil, Russia, India and China) growing 23% over the prior-year period and accounting for 9% of total revenue.
Personal Systems Group
Personal Systems Group (PSG) revenue grew 10% to $11.2 billion, with unit shipments up 19%. Notebook revenue for the quarter grew 21%, while Desktop revenue declined 2%. Commercial client revenue grew 7%, while Consumer client revenue increased 15%. Operating profit was $616 million, or 5.5% of revenue, up from $589 million, or 5.8% of revenue, in the prior-year period.
Imaging and Printing Group
Imaging and Printing Group (IPG) revenue declined 1% to $7.5 billion. Supplies revenue grew 9%, while Commercial hardware revenue and Consumer hardware revenue declined 10% and 21%, respectively. Printer unit shipments decreased 8%, with Consumer printer hardware units down 8% and Commercial printer hardware units down 9%. Operating profit was $1.2 billion, or 15.5% of revenue, versus $1.1 billion, or 14.5% of revenue, in the prior-year period.
Enterprise Storage and Servers
Enterprise Storage and Servers (ESS) reported total revenue of $5.1 billion, down 1%. Storage revenue grew 13% led by 16% revenue growth in the midrange EVA product line and 9% revenue growth in the high-end XP product line. Industry Standard Server revenue declined 3% and Business Critical Systems revenue declined 10% while ESS blade revenue increased 43%. Operating profit was $705 million, or 13.9% of revenue, down from $736 million, or 14.4% of revenue, in the prior-year period.
HP Services (HPS) revenue increased 99% to $8.6 billion, led by $3.9 billion revenue resulting from the EDS acquisition for the period between the Aug. 26 acquisition date and Oct. 31. Excluding EDS, HPS revenue grew 10%. Revenue in Technology Services and Outsourcing Services grew 10% and 15%, respectively, with revenue in Consulting and Integration up 2%. Operating profit was $920 million, or 10.6% of revenue, compared to $515 million, or 11.8% of revenue, in the prior-year period.
HP Software revenue grew 13% to $855 million, led by 15% growth in the Business Technology Optimization portfolio. Operating profit was $195 million, or 22.8% of revenue, up from $145 million, or 19.1% of revenue, in the prior-year period.
HP Financial Services
HP Financial Services (HPFS) reported revenue of $691 million, up 5%. Financing volume increased 5%, and net portfolio assets declined 2%. Operating margin was 7.4% of revenue, up from 7.3% in the prior-year period.
HP generated $3.3 billion in cash flow from operations for the fourth
quarter. Inventory ended the quarter at $7.9 billion, down 7 days.
Accounts receivable of $16.9 billion was up 2 days. Accounts payable
ended the quarter at $14.1 billion, down 1 day. HP’s dividend payment of
$0.08 per share in the fourth quarter resulted in cash usage of $196
million. HP utilized $1.9 billion of cash during the fourth quarter to
repurchase approximately 45 million shares of common stock in the open
market. HP exited the quarter with $10.3 billion in gross cash, which
includes cash and cash equivalents of $10.2 billion, short-term
investments of $93 million, and certain long-term investments of $95