Hewlett-Packard Looks Recession-Proof

| About: HP Inc. (HPQ)
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Gartner and IDC have just released preliminary results for Q4 that declare Hewlett Packard Co (NYSE:HPQ) as the leader of the worldwide PC market in 2007. Gartner says it has 18.2% share versus Dell (DELL) at 14.3%. In 2006, HP and Dell were in a tie for the top slot.

It was not just the PC business that did well at HP in 2007. HP showed an overall growth of 14% with net revenue of $104.3 billion in fiscal 2007. In 2008, it expects revenue to be approximately $111.5 billion. Since Q4, it acquired NUR Macroprinters Ltd. (NURMF.PK) for $117.5 million in order to increase its presence in wide-format printing.

Segment-wise, Personal Systems Group (NYSE:PSG) showed 21% growth in net revenue to $36.4 billion accounting for around 35% of total revenue. Imaging and Printing Group revenue increased 4% to $28.5 billion (27.3% of total revenue). Enterprise Storage and Servers (NYSE:ESS) had revenues of $18.77 billion, a 5% growth and 18% of revenue. HP Services revenue grew 3% to $16.65 billion (16% of total revenue). HP Software revenue increased 74% to $2.3 billion (Though the increase is exponential, it is just around 2% of the total revenue). HP Financial Services revenue grew by 12% to $2.3 billion.

HP has done well globally, a strong reason for it to be unfazed by the slowing U.S. economy. In 2007, 67% of its total revenue was from outside the US. In the fourth quarter, Asia-Pacific grew by 20%, EMEA by 19% and Americas was up by 10%. BRIC countries grew 37% y-o-y in Q4 and accounted for 9% of total revenue.

Credit for this stunning turnaround goes to its CEO Mike Hurd who has cut around 15,000 jobs since taking over in 2005 and expanded into China and India. This strategy is bound to act as a cushion this year for HP with the U.S. economy expected to grow just 1.9% versus 2.2% last year (as per World Bank estimates). China is expected to grow 10.8%, while India’s growth will be at 8.4%.

HP’s stock is currently trading around $43, and its market cap is around $112 billion. The drop in the stock is entirely due to the macro market softness, and is a good long-term buy and hold opportunity.