H-P +3.8% AH; guidance in-line, PC/server performance improves

|By:, SA News Editor

H-P (HPQ) expects FQ1 EPS of $0.82-$0.86 and FY13 EPS of $3.55-$3.75, in-line with consensus estimates of $0.85 and $3.66.

PC sales only fell 2% Y/Y in FQ4, much less than FQ3's 11% and FQ2's 20%, and also better than the 7.6% shipment drop IDC estimated for calendar Q3. Commercial PC sales +4%, consumer -10%. Desktops -5%, notebooks +3%. Division op. margin was flat Q/Q at 3%, which suggests H-P is being aggressive with pricing.

Enterprise Group sales rose 2% after dropping 9% in FQ3 and 10% in FQ2. Networking +3%, x86 servers +10% (a sign of share gains), business critical systems -17% (continued Itanium weakness), storage +1%, tech services -6%. Op. margin -70 bps Q/Q to 14.5%. H-P might be benefiting from LBO-related uncertainty at Dell.

Enterprise services are still weak, falling 9% Y/Y (even with FQ3). But op. margin rose 110 bps to 4.4%. Software also had a rough quarter, falling 9% after rising 1% in FQ3.

Printing -1%, better than FQ3's -4%. Op. margin +210 bps to 17.7%. Hardware sales (drives supplies sales) +6%, supplies -4%. Financial Services -6%, same as FQ3.

R&D spend fell 20% Y/Y to just $729M (2.7% of revenue). Sales/marketing +4% to $3.35B.

$479M was spent on buybacks, up from a mere $3M in FQ3. H-P, which has lately been focused on paring its debt load, recently said it would ramp its buyback activity.

CC at 5PM ET. FQ4 results, PR.