The firm paid its normal quarterly dividend totaling $206 million. The company closed the year with a strong balance sheet including total growth cash of $10.1 billion and net cash of $2.9 billion.
Performance Analysis of Segments
Imaging and Printing Group (IPG)
The segment had revenue of $7.3 billion, up 4% year-over-year. Excluding cameras, revenue was up 5%. Supplies revenue grew 6% and Commercial hardware revenue grew 7%, while Consumer hardware revenue declined 5% year-over-year.
Segment operating profit was $1.2 billion or 15.7% of revenue, reflecting gross margin expansion and favorable product mix. The firm continues to see solid momentum in its growth initiatives. The Graphic Arts business grew in double-digits and color laser and multi-function printer units grew 14% and 23% respectively. Commercial hardware units increased 13% and consumer hardware units declined 2%.
The company continues to focus on targeting unit growth in areas of high supplies consumption. But it does believe that it had more unit opportunities than it realized in Q1. Going forward, the firm expects to at least maintain shares in the mature inkjet markets and see additional opportunities for growth in targeted areas, such as Graphic Arts and Enterprise Printing.
Within IPG, the firm is also focused on reducing the cost structure and have a number of ongoing initiatives to improve supply chain efficiency and lower product cost. At the same time, the firm will continue to invest for growth and profitability through its commitment to research and development, targeted share gains, growth in Graphic Arts and expansion of its Enterprise Printing sales force.
Personal Systems Group (PSG)
PSG had another outstanding quarter with market share gains and strong margin performance. Revenue grew 24% year-over-year, or $2 billion with unit shipments up 27%.
The firm had a strong holiday season with consumer client revenue up 29%, consumer notebook sold particularly well, demonstrating the firm’s strength, strong product lineup, targeted marketing and the strength of its retail channels. Commercial client revenue grew 22%, reflecting solid demand in enterprise and mid-market segments. Overall, notebook shipments grew 49%, with strong performance in both Consumer and Commercial. Desktop and workstation units were each up 15%.
Segment operating profit for the quarter was $628 million, or 5.8% of revenue. Compared with the prior year period, PSG operating profit increased 52%, or $214 million, reflecting solid execution, increased attached and the benefit of a favorable commodity environment.
The firm expects to have continued balance revenue growth and profitability by managing its costs, investing in market opportunities and leveraging its strength in notebooks, retail and emerging markets.
Technology Solutions Group (TSG)
Enterprise Storage and Servers revenue grew 9% year-over-year to $4.8 billion. Within ESS, Industry Standards Server revenue grew 11% and ESS blades grew 81%.
Revenue in storage grew 10%, with the midrange EVA business growing 14% and the Nearline business posting 4% growth, after many quarters of declining revenue. Business critical systems revenue grew 1% year-over-year. Integrity server revenue grew 37% and now represents 75% of BCS mix.
ESS operating margins for the quarter were 3.8 points to 14% of revenue, filled by favorable component pricing, improved execution and expense discipline. While the management is pleased with the progress it has made, it can still do a better job penetrating its addressable market. The firm take actions to drive go-to-market initiatives and add sales resources to expand account coverage and strengthen its customer relationship.
HP Services
The company had a solid quarter in HP services, with revenue up $4.4 billion, up 11% over the prior year period. Outsourcing and consulting and integration revenue increased 15% and 13% respectively, while technology services revenue was up 9%. Operating profit for the quarter was $489 million or 11.2% of revenue.
The firm remained focused on balancing margin expansion with revenue growth. The firm’s Service segment results reflect improved focus on services attach, combined with operational improvements from its ongoing efficiency initiative. The firm has made progress reducing its cost to service delivery, but it still has considerable work to do.
HP Software
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