Strong Showings from HP and Salesforce.com

Hewlett-Packard Co. (HP) posted strong second quarter financial results, with 70 percent of the revenues derived from sales outside of the U.S. In other news, Salesforce.com revealed similarly strong first quarter results.

Focal Points:

• HP reported revenues for the second quarter of its fiscal 2008 year. Total revenues for the quarter increased 11 percent year-over-year to $28.3 billion. Net income for the quarter on a GAAP basis was $2.1 billion or $0.80 per diluted share. This was 16 percent higher than comparable net income of $1.8 billion, or 65 cents per share, for the same period last year, HP added. Company officials raised its full year guidance for its revenues to the range of $114.2 – 114.4 billion, not including the EDS acquisition. When adjusted for currency fluctuations, revenues in the Americas grew 2 percent, revenues in Europe, the Middle East and Africa increased 6 percent, and revenues in Asia Pacific gained 7 percent. In addition, revenues from outside of the United States in the second quarter was 70 percent of the total, with revenues from the BRIC countries (Brazil, Russia, India and China) growing 26 percent over the prior-year period and accounting for 10 percent of total revenues.
• HP's Personal Systems Group (PSG) revenue grew 16 percent year-over-year to $10.1 billion, with unit shipments up 21 percent on a year-over-year basis. Imaging and Printing Group (IPG) revenue increased six percent year-over-year to $7.6 billion. Enterprise Storage and Servers (ESS) reported revenue of $4.8 billion, up four percent over the prior-year period fueled by ESS blades, which climbed 68 percent. On a year-over-year basis, industry-standard server revenue was flat and storage revenue grew 14 percent. Business critical systems revenue gained seven percent. HP Services (HPS) revenues increased by 12 percent year over year while and HP Software grew 28 percent. HP Financial Services (HPFS) reported revenue of $685 million, an increase of 25 percent year-over-year.
• Saleforce.com announced revenues for the first quarter 2009 revenue was $247.6 million, an increase of 52 percent from $162.4 million on a year-over-year basis. Subscription and support revenues were $225.3 million, an increase of 53 percent on a year-over-year basis while professional services and other revenues were $22.3 million, an increase of 51 percent on the same basis. Net income on a GAAP basis was $9.6 million, up from $0.7 million in the year-ago period. The number of net paying customers rose by 2,600 to a record 43,600 customers, according to company officials. The company also stated it is raising its full year revenue guidance to approximately $1.065 billion.

Experton Group believes technology firms with balanced portfolios, diversified markets, well-managed tactical R & D investments, and leveraged intellectual property (IP) assets will perform well whether or not there is an economic downturn. HP under CEO Mark Hurd has grown to be a profitable powerhouse in all its major markets, and will see further gains once it has completely integrated EDS into the company and truly leverages its services business. Salesforce.com has shown the software-as-a-service model can be profitable and that cloud computing applications and infrastructure must become part of an enterprise's portfolio. The company is one of few that can provide thought leadership in cloud computing architectures. IT executives should work with companies such as these to discuss ways to leverage and tailor IP assets so that they can develop agile architectures, products, and services that can best position them to address their enterprise's future business objectives.