Revenue in the Americas grew 4% on a year-over-year basis to $11.1 billion. Revenue grew 16% in Europe, the Middle East and Africa to $11.9 billion. Revenue grew 16% in Asia Pacific to $5.2 billion. When adjusted for the effects of currency, revenue in the Americas grew 2%, revenue in Europe, the Middle East and Africa grew 6%, and revenue in Asia Pacific grew 7%. Revenue from outside of the United States in the second quarter was 70% of the total, with revenue in the BRIC countries (Brazil, Russia, India and China) growing 26% over the prior-year period and accounting for 10% of total revenue.
Personal Systems Group
Personal Systems Group (PSG) revenue grew 16% year over year to $10.1 billion, with unit shipments up 21% on a year-over-year basis. Notebook revenue for the quarter grew 31% over the prior-year period, while desktop revenue was flat. Commercial client revenue grew 17% year over year, while Consumer client revenue increased 16%. Operating profit was $544 million, or 5.4% of revenue, up from $417 million, or 4.8% of revenue, in the prior-year period.
Imaging and Printing Group
Imaging and Printing Group (IPG) revenue grew 6% year over year to $7.6 billion. On a year-over-year basis, supplies revenue grew 8%, Commercial hardware revenue grew 6% and Consumer hardware revenue declined 3%. Printer unit shipments increased 6% year over year, with Consumer printer hardware units up 4% and Commercial printer hardware units up 9%. Momentum in key growth initiatives continued, with solid growth in both the Graphic Arts and the Enterprise businesses. Operating profit was $1.2 billion, or 16.2% of revenue, versus $1.2 billion, or 16.3% of revenue, in the prior-year period.
Enterprise Storage and Servers
Enterprise Storage and Servers (ESS) reported revenue of $4.8 billion, up 4% over the prior-year period fueled by ESS blades, which grew 68%, and storage, which grew 14%. Storage revenue growth was fueled by the high-end XP line, which grew 21%, and the midrange EVA line, which grew 17%. On a year-over-year basis, Industry Standard Server revenue was flat. Business Critical Systems revenue increased 7%. Operating profit was $655 million, or 13.7% of revenue, up from $452 million, or 9.8% of revenue, in the prior-year period.
HP Services
HP Services (HPS) revenue increased 12% year over year to $4.6 billion. Revenue in Technology Services grew 10% with Outsourcing Services and Consulting and Integration up 14% and 15%, respectively, compared with the prior-year period. Operating profit was $508 million, or 11.0% of revenue, up from $449 million, or 10.9% of revenue, in the prior-year period.
HP Software
HP Software revenue grew 28% compared with the prior-year period to $727 million, led by 36% growth in the Business Technology Optimization portfolio. Operating profit was $93 million, or 12.8% of revenue, up from $7 million, or 1.2% of revenue, in the prior-year period.
Financial Services
HP Financial Services (HPFS) reported revenue of $685 million, an increase of 25% year over year. Financing volume and net portfolio assets increased 15% and 14%, respectively, over the prior-year period. Operating margin was 6.9% of revenue, up from 6.5% in the comparable period last year.
Asset management
HP generated $4.8 billion in cash flow from operations for the quarter. Inventory ended the quarter at $7.7 billion, down 2 days over the prior year. Accounts receivable of $13.6 billion was up 2 days over the prior-year period. Accounts payable ended the quarter at $12.4 billion down 1 day from the prior-year period. HP’s dividend payment of $0.08 per share in the second quarter resulted in cash usage of $197 million. HP utilized $2.8 billion of cash during the second quarter to repurchase approximately 66 million shares of common stock from the open market. HP exited the quarter with $11.8 billion in gross cash, which includes cash and cash equivalents of $11.6 billion, short-term investments of $56 million, and certain long-term investments of $117 million.
Outlook
HP estimates Q3 FY08 revenue will be approximately $27.3 billion to $27.4 billion.
Third quarter FY08 GAAP diluted EPS is expected to be approximately $0.76 to $0.77 and non-GAAP diluted EPS is expected to be approximately $0.82 to $0.83. Third quarter FY08 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.06 per share, related primarily to the amortization of purchased intangibles.
HP estimates FY08 revenue will be approximately $114.2 billion to $114.4
billion, up from previous guidance of $113.5 billion to $114.0 billion.
