Strong PC Sales Drive Hewlett-Packard’s Revenue Gain

by CXOtoday News Desk    Aug 21, 2014

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Hewlett-Packard reported an increase in quarterly revenue after sales that topped analysts’ estimates, fueled by improving PC sales. The revenues were reported to have climbed 12 percent, a move that had surprised industry watchers and analyst. The Palo Alto company is undergoing a major overhaul aimed at cutting costs and re-orienting itself toward higher-margin businesses such as computing infrastructure. As the company is trying to reduce a reliance on PCs and move toward servers, storage and networking for enterprises - part of Chief Executive Officer Meg Whitman’s effort to reinstate the tech major to growth track seems to be paying off.

Whitman credited personal computer demand for “coming back some” as consumers and corporations upgraded ageing machines. She was pleased with 2 percent growth in revenue to $6.9 billion at the Enterprise Group, the company’s second-largest business that deals in networking, storage and servers.

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“It’s a turnaround in a declining business,” Whitman said in an interview singling out a 9 percent increase in sales of industry-standard servers in particular, which she believes is owing to the  uncertainty around Lenovo’s acquisition of IBM’s low-end server unit helped steer business to HP. “We’ve been able to capitalize on that uncertainty and our win rates are up against IBM,” Whitman added.

The IT major intends to remain rigorous on costs to try and boost profitability. In May, it estimated another 11,000 to 16,000 more jobs needed to be cut on top of 34,000 previously announced. The PC market right up through tablets, is flat to declining, says Whitman, stating that “We think that will continue and we think that we can continue to gain share in a flat market.”

Whitman believes which it expects political forces in Russia and fierce competition in China to present challenges for the company, there is a key focus on the US and emerging markets where computing will continue to grow. She based her confidence in HP’s product line-up and relationships with partners, saying the company’s PC business “has some wind beneath its wings.”

And while China, home to HP rival Lenovo, was a weak spot for HP personal computer sales, the region did well when it came to printer, server and software products, according to Whitman, who did not want to rule out any geography and market and also hinted at some acquisitions as part of its growth drive.