Surge in laptop sales drives HP results

A 31 percent jump in laptop PC sales helped drive Hewlett-Packard's strong quarterly results on Tuesday, although there were signs of growth in all its businesses.

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A 31 percent jump in laptop PC sales helped drive Hewlett-Packard's strong quarterly results on Tuesday, although there were signs of growth in all its businesses.

Total revenue for the second quarter was US$28.3 billion (£14.4 billion), up 11 percent from a year earlier. Net income was $2.06 billion (£1.04 billion), up from $1.78 billion (£905,907) in the same quarter a year ago, the company said.

HP announced preliminary financial results last week, when it also revealed plans to buy IT services company Electronic Data Systems for $13.9 billion (£7 billion). It delayed the full results, including details of how the various segments performed, until Tuesday.

HP's biggest growth came from its software and services divisions, although they started from a smaller base. Services revenue increased 12 percent from the same quarter last year to $4.6 billion (£2.31 billion). Software revenue jumped 28 percent to $727 million (£370 million), HP said.

The Personal Systems Group is HP's biggest division. Revenue there grew 16 percent from a year earlier to $10.1 billion, with unit sales up 21 percent, the company said. The growth came almost all from laptop sales, which climbed 31 percent. Desktop PC sales were flat.

In a conference call after the results were released, CEO Mark Hurd said the EDS acquisition will allow HP to capture a significantly bigger portion of what businesses spend on IT.

"We expect the acquisition to accelerate our reach into key enterprise accounts," he said. "HP is great at engineering and customer support, but we have a coverage problem. We expect the EDS acquisition to double our share of the enterprise wallet and create a platform for opportunities for new business growth," he said.

He said the combination of software and services will become increasingly important for HP and the industry.

"The alignment of software and services is a really strategic thing for us in the context of automating (business) processes," he said. "EDS is the biggest applications outsourcer in the world, the biggest applications testing company in the world. You'll continue to see more and more alignment of software and services in the evolution of the services industry."

Hurd pledged to cut costs at the combined company, which, among other things, will probably mean job cuts. "Make no mistake, we will get the cost out. We will create value for our shareholders," he said.

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