Hewlett-Packard Co. (NYSE: HPQ) has reported Q3 earnings and the company is about to have a live conference call here in a bit, at 5 p.m. EST. The consensus estimates have stated some pretty lofty goals for the world's largest tech company to hit. Right now, Wall Street has stapled a $0.65 EPS figure on CEO Mark Hurd's forehead, which represents a 20% YoY gain for the PC and printer manufacturer and marketer. Can it hit this looming and large target Thursday? Find out here in a few minutes.Revenues were expected to be in the range of $23.9 billion to $24.2 billion for the quarter. If HP keeps inline with the growth that many industry pundits expect, it will crack the $100 billion in sales per fiscal year barrier very soon. With all the internal activity HP has generated in the last year (like the Mercury Interactive acquisition), year-ago quarter comps are a little tricky (if even possible), but one thing is clear: HP is doing way more right things under CEO Hurd than wrong things.
In fact, every time I hear Hurd speak on quarterly conference calls, the man seems to have the perfect blend of financial, operational and sales savvy that a $100 billion CEO should have. He exudes cool confidence and you can tell he has all his plays under his jacket at all times, though he does not reveal most of them. I'm quite of the belief that he is the right person to lead HP, and from recent quarterly financial results and guidance, I stand by that opinion. We'll see if Hurd is further vindicated below. With that, let's begin. Remember to use the "Refresh" key on your web browser to refresh this post every few minutes. All times below are in EST.
5:03pm -- HP's Q3 call is starting. Some standard corporate disclaimers are being read here. Until they are done, click here and get a head start on the company's Q3 numbers.
5:05pm -- the rundown of HP's Q3 numbers begins. Some highlights now being discussed:
- Net revenue of $25.4 billion, up $3.5 billion year over year, or 16%
- GAAP operating profit of $2.1 billion; $0.66 earnings per share, up from $0.48 in the prior-year period
- Non-GAAP operating profit of $2.3 billion; $0.71 earnings per share, up from $0.52 in the prior-year period
5:10pm -- the details of HP's Q3 results are now being gone over in greater detail, and I'm sure the breakdown per operating segment will be up soon. For now, get a load of all the details using this link (PDF file). HP operates six business segments: Personal Systems, Imaging and Printing, Enterprise Storage and Servers, HP Services, HP Software and HP Financial Services.
5:13pm -- CEO Hurd goes right into the details of HP's acquisition movements in the past quarter, and he singles out the OpsWare buy. He's also talking about HP's move into the storage virtualization arena.
5:15pm -- HP's call goes offline unexpectedly. Looks like technical difficulties are ruling the day in Palo Alto...stand by while I twiddle my thumbs (feel free to join in). We're on hold, as Hurd was cut off in mid-sentence. Standing by...
5:20pm -- HP's call is still offline, although we're almost back....here we go after a five-minute break.
5:21pm -- details on the financial performance of each business segment is now being discussed. We'll start with the Personal Systems Group. HP's PSG revenue grew 29% year over year to $8.9 billion, with unit shipments up 33% on a year-over-year basis. These results bring PSG's year-to-date revenue growth to nearly $5 billion. Notebook revenue grew 54% over the prior-year period, while desktop revenue grew 12%. Commercial client revenue grew 19% year-over-year, while Consumer client revenue increased 46%. Operating profit was $519 million, or 5.8% of revenue, up from $275 million, or 4.0% of revenue, in the prior-year period.
5:23pm -- HP's Imaging and Printing Group (IPG) revenue grew 8% year over year to $6.8 billion. On a year-over-year basis, supplies revenue grew 9%, commercial hardware revenue grew 6% and consumer hardware revenue grew 10%. Printer unit shipments increased 10% year over year, with consumer printer hardware units up 8% and commercial printer hardware units up 17%. Momentum in key growth initiatives continued, with printer-based multi-function devices up 76%. Operating profit was $981 million, or 14.5% of revenue, up from $884 million, or 14.2% of revenue, in the prior-year period.
5:25pm -- Hewlett-Packard's Enterprise Storage and Servers (ESS) segment reported revenue of $4.5 billion, up 10% over the prior-year period. On a year-over-year basis, industry-standard server revenue increased 16%, with x86 blade revenue up 81%. Storage revenue grew 6%, with revenue growth of 7% in external disk storage, including 14% in the midrange EVA line, and partially offset by a decline in the tape business. Business critical systems revenue declined 3%, with Integrity systems growth of 71% offset by declines in PA-RISC and Alpha. Operating profit was $464 million, or 10.2% of revenue, up from $296 million, or 7.2% of revenue, in the prior-year period.
5:27pm -- HP Services saw revenue increase 8% year over year to $4.2 billion. Revenue in Technology Services grew 5% over the prior-year period, while Consulting and Integration revenue rose 11%, and Outsourcing Services revenue rose 11%. Operating profit was $430 million, or 10.3% of revenue, up from $364 million, or 9.4% of revenue, in the prior-year period.
5:28pm -- HP Software grew its revenue 74% over the prior-year period to $554 million, led by strong growth from the businesses acquired in HP's purchase of Mercury Interactive. On a year-over-year basis, HP OpenView grew 14% excluding Mercury. Operating profit was $81 million, or 14.6% of revenue, up from $13 million, or 4.1% of revenue, in the prior-year period.
5:31pm -- HP Financial Services (HPFS) reported revenue of $582 million, an increase of 12% year over year. Financing volume and net portfolio assets increased 7% and 8%, respectively, over the prior-year period. Operating margin was 6.7% of revenue, comparable to the same period last year.
5:33pm -- the analyst Q&A begins. First question: are the problems in the overall economic environment globally giving HP any headway into demand prediction? Hurd answers: he's not an economist, so right now, HP sees no material issues with demand for its products.
5:36pm -- second question: why sis ESS revenue increase? What was the cause? Answer: Hurd says that component sales were good and HP was disciplined on pricing at the same time sales grew. This speaks highly of HP's storage products. Hurd also talks about warranties being sales drivers.
5:40pm -- next question: HP services margin was very good -- what spiked the margins in that segment? Answer: HP's margin increased in many areas, including HP services. The overall cause is excellent "opex" processes, meaning that operating expenses have been brought under control nicely in many of HP's businesses, no doubt under Hurd's operational finesse. Hurd says that "HP is just getting started" as well.
5:43pm -- next question: which components in HP's supply arsenal are the "tightest" in terms of inventory going into the back half of the year? Answer: Hurd says that HP "feels good" about its supply and media statements about tighter supply on components like disk drives and LCD panels may be overblown.
5:46pm -- next question: what is HP seeing in the Imaging business in terms of operating growth and profitability. Answer: Hurd says that the IPG area within HP performed better than expected in the Q3 period, and HP is even being seen as leading the pricing in the consumer printing market (and other printing markets). It is making improved margins as well.
5:49pm -- next question: HP's data center-based business has been increased this year -- is HP expecting more soon? Hurd says that the OpsWare and Mercury Interactive acquisitions have given HP a complete server virtualization portfolio and Hurd sounds like he wants to make HP the global leader in hardware virtualization. His strong language here deeply indicates this.
5:54pm -- next question: PC margins included attach rates on additional sale items. How much was that amount exactly? Hurd says that HP is good, but not great at the "attach" that goes along with hardware and software when an HP personal computer is sold. Hurd also talks about the "services" attach, something that HP has a large opportunity in the future with.
5:57pm -- last question: was HP's share buyback amount this past quarter indicative of future movements? Answer: HP's share buybacks are not constrained by its cash flow really, and when buybacks happen, it's due to planned activity and HP does not go looking for debt to finance these buyback movements.
6:01pm -- that's it! Another excellent and very solid quarter for HP. Hurd apologizes for the technical problems with the call. The company seems to be making all the right moves in every front, and Hurd -- many times -- reiterated that HP is "just getting started." If this is true, HP is set to take over the world any day now.
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