- Second quarter GAAP diluted earnings per share up 15% year over year with non-GAAP diluted earnings per share up 14% and cash flow from operations up 28%
- Second quarter gross margins and operating margins up 1.0 and 0.1 percentage points, respectively, year over year
- Continued strength in commercial businesses resulted in commercial revenue increasing 8% year over year, with Enterprise Servers, Storage and Networking revenue up 15%, Software revenue up 17%, and commercial PC Clients and Printers revenue up 13% and 7%, respectively
- Revising full year GAAP diluted earnings per share outlook down to at least $4.27 and non-GAAP diluted earnings per share outlook down to at least $5.00
HP (NYSE:HPQ) announced financial results for its second fiscal quarter ended April 30, 2011. Net revenue of $31.6 billion was up 3% from the prior-year period as reported and up 1% when adjusted for the effects of currency.
GAAP diluted earnings per share (EPS) was $1.05, up 15% from $0.91 in the prior-year period. Non-GAAP diluted EPS was $1.24, up 14% from $1.09 in the prior-year period. Non-GAAP financial information excludes after-tax costs of approximately $0.19 per share and $0.18 per share in the second quarter of fiscal 2011 and 2010, respectively, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges. Information about HP's use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below.
"HP executed well and delivered a solid quarter," said Léo Apotheker, HP president and chief executive officer. "Our enterprise strategy, with services at its core, is focused on higher value-added solutions. Today we are accelerating our efforts to align our services business model to our long-term strategy to deliver unprecedented value to our customers and a better return for our shareholders."
|Q2 FY11||Q2 FY10||Y/Y|
|Net revenue ($B)||$31.6||
|GAAP operating margin||9.4%||9.3%||0.1 pts|
|GAAP net earnings ($B)||$2.3||
|GAAP diluted EPS||$1.05||
|Non-GAAP operating margin||11.3%||11.2%||0.1 pts|
|Non-GAAP net earnings ($B)||$2.7||
|Non-GAAP diluted EPS||$1.24||
"In the second quarter, we saw continued strength in the enterprise with combined revenue from our commercial businesses up 8% year over year," said Cathie Lesjak, HP executive vice president and chief financial officer. "We again expanded our margins and increased both earnings per share and cash flow from operations double digits year over year."
Trends and regional performance
Results were largely driven by performance in the commercial sector as businesses continued to spend on technology. HP experienced uneven consumer performance across its product categories during the quarter with continued softness in consumer PCs across all geographies.
Second quarter revenue was up 2% year over year in the Americas to $13.8 billion. Revenue was down 1% in Europe, the Middle East and Africa and up 10% in Asia Pacific to $11.7 billion and $6.1 billion, respectively. When adjusted for the effects of currency, revenue was up 1% in the Americas, flat in Europe, the Middle East and Africa and up 4% in Asia Pacific. Revenue from outside of the United States in the second quarter accounted for 66% of total HP revenue. HP saw accelerated growth in BRIC countries (Brazil, Russia, India and China) with revenue increasing 19% while accounting for 12% of total HP revenue.