HP has announced FY13 revenue of $112.3bn, down 5% in constant currency. Q4 revenue was down 1% in constant currency. The non-GAAP operating margin in FY13 was 8%, compared with 9% in FY12. EMEA Q4 revenue was down 5% to $10.3bn - and down 9% for the full year. HP says the EMEA environment remained tough, although it saw growth in Germany and other “pockets” of Western Europe. There is no specific mention of the UK here, so we have to assume it did not grow.
By service line, Q4 revenue in Personal Systems was down 2%, Printing down 1%, Enterprise Group (servers, storage and networking) up 2%, and Software down 9% (Software remains the most profitable area with a 30.8% operating margin).
In Enterprise Services specifically, revenue declined 9% in Q4 with a 4.4% operating margin. Application and Business Services revenue was down 10%, and Infrastructure Technology Outsourcing revenue declined 9%. The picture is, not surprisingly, much rosier in strategic enterprise services, which includes cloud, big data, application modernisation and security. Here growth was "double digits". HP has been realigning its sales people around these types of services, where it hopes to achieve not only strong revenue growth but improved margins too. For example, HP needs to be signing many more deals like the Deluxe Digital contract it inked earlier this year.
Cathie Lesjak, CFO, acknowledged that more work has to be done “to align our cost structure to support profitable long-term growth”. Part of that process has involved cutting staff numbers, and last month HP confirmed that c7,100 employees in EMEA will either “exit the company” or be redeployed (see HP confirms EMEA job cuts).
As HP enters the third year of its five-year turnaround the task Meg Whitman (CEO) faces is significant, with revenue and/or margin challenges in many segments of the business. In services, the key challenge is transitioning towards more profitable and higher growth areas. However, it is having to do this while reducing costs and cutting staff at the same. But no one seems to care anyway - there was not a single question about services friom the 'herd' on the analyst concall last night. Heigh-ho.