HP is an interesting company. They have been cranking out quarterly profits in the $1-3 billion range every quarter like clockwork (recession or no recession, dot-com bubble or dot-com bust) for over a decade, yet it’s all seems very boring to the casual observer. They are that grey blob that permeates the server room of many businesses. They slap their logo on grey business notebooks, desktops, and consumer products that while functional and effective are simply unremarkable. Well the blob has done it again. Yesterday Hewlett-Packard held its quarterly financial analyst conference call in which it announced a solid third quarter overall operating profit of $2.3 billion.
The earnings report is pretty cut and dried, with the major contributors to this quarter’s successes being record service contract signups, sizeable upticks in the printer and networking equipment segments, as well as the overall increase in corporate spending realized by most other technology firms in this latest round of reporting as well. The outlook for the company in Q4 is pretty much the same story plus the seasonal uptick you’d expect around Christmas time.
The conference call was remarkably devoid of any future product gossip with the main notable bits being release confirmation of a Microsoft based tablet “soon,” and a WebOS based tablet in early 2011. They chatted up their newly released Proliant G7 series servers with special power saving technologies, as well as a new data de-duplication product they suppose is “twice as good” as its competitors for the price.
This past quarter hasn’t been all business as usual however. Recently you’ll recall the abrupt departure of CEO Mark Hurd which sent stock prices freefalling for a bit. Mr. Hurd spared no expense when it came to handing out pink slips and pay-cuts, and as such did not win any popularity contests with most employees during his tenure. His perverse love of heads rolling seemed to resonate well with investors however as he was able to keep costs under control and bang out profits in recent years while other struggled to stay afloat.
The resulting stock price plunge from his departure can perhaps be viewed as his parting gift to the company, as HP is currently in the middle of a rather large stock buy-back program. Between Q2 and Q3 they purchased about $2.6B worth of shares. HP plans to purchase another $2.6B or so worth of stock between Q3 and Q4, and with share prices magically 10% lower they can get a little more bang for their buy-back buck.
HP is in an enviable position in the technology world. They seemingly sit there, make money, acquire something, make more money, rinse and repeat. Perhaps this is good enough for HP’s board and its investors, but is it wrong to wish for something a little more impassioned?S|A