HP: 2011 was a "Challenging Year," We're Focused Now

Paul Lilly

Hewlett-Packard on Monday announced financial results for its fourth quarter and full fiscal year ended October 31, 2011, and it wasn't as bad as some analysts were expecting. In fact, HP posted a 1 percent year-on-year gain in GAAP net revenue with $127.4 billion. Some would call that mostly flat, others a miracle considering 2011 was the year HP screwed the pooch with its Palm/webOS acquisition and, for a period of time, couldn't seem to figure out what to do with its PC business.

"While FY11 proved to be a challenging year, we grew non-GAAP EPS 7 percent and generated $12.6 billion in cash flow from operations," said Cathie Lesjak , HP executive vice president and chief financial officer. "We're remaining cautious heading into FY12 but are focused on delivering our earnings outlook and driving shareholder value."

Recently anointed company CEO Meg Whitman added that HP "needs to get back to the business fundamentals in fiscal 2012, including making prudent investments in the business and driving more consistent execution." Or in other words, no more multi-billion dollar acquisitions for awhile.

"Fiscal 2011 non-GAAP net revenue includes an additional $0.2 billion of revenue resulting from the exclusion of contra revenue associated with sales incentive programs implemented in the fourth quarter in connection with the wind down of HP's webOS device business, net of fourth quarter webOS device revenue," HP wrote in its financial report. "Non-GAAP earnings and operating profit information excludes after-tax costs of $3.3 billion, or $1.56 per diluted share, related to the wind down of HP's webOS device business, impairment of goodwill and purchased intangible assets, amortization of purchased intangible assets, restructuring charges and acquisition-related charges."

HP's services and software revenue grew 2 percent year-over-year and 28 percent year-over-year, respectively, while its Enterprise Servers, Storage, and Networking (ESSN) revenue dropped 4 percent and its Personal Systems Group (PSG), otherwise known as its PC division, declined 2 percent, both year-over-year.

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