HP Grows PC Business on Windows XP Refresh

Who says the PC is dead? HP reports third quarter 2014 earnings with a surprising uptick in the PC business unit.

The PC business is far from dead. That's the big message coming from HP during its third quarter fiscal 2014 earning call.

HP reported third quarter 2014 net revenue of $27.6 billion for a one percent year over year gain. Part of HP's success in the quarter came from growth in its Personal Systems business unit, which includes sales of desktop and notebook computers.

HP's CEO Meg Whitman said during the call that for the first time in three years, HP delivered top-line revenue growth on a year-over-year basis.

"In personal systems we had an excellent performance, with revenue up 12 percent from the prior year period," Whitman said. "This represents the third successive quarter of revenue growth for personal systems in a market that has stabilized, but nevertheless, continues to contract."

Whitman added that the end of Microsoft support for Windows XP contributed to HP's growth. Microsoft ended support for Windows XP earlier this year. At this point though, it's not clear how much more growth there is to be had in further gains from the Windows XP refresh.

"While the XP refresh is largely done, we’re seeing good growth and continued growth in the commercial side," Whitman said. "And by the way, our consumer business grew 8 percent, and we haven’t seen that in many-many years."

Whitman added that she feels like the PC business has some wind beneath its wings and that HP will still have a good future in that business.

"We believe we can continue to gain share in PCs despite the challenges in this market as it consolidates," Whitman said.

HP's CFO Cathie Lesjak noted that the improvement in Personal Systems revenue was driven by volume and some improved pricing. Lesjak added that HP also implemented some operational cost reductions and has also been working to streamline and refine supply chain management across the business.

In terms of x86 servers, HP is also doing well with a 9 percent year-over-year growth rate for the business. That success however is not translating to HP's Unix business, which it refers to as Business Critical Systems.

"In Business Critical Systems, revenues declined 18 percent, broadly in line with the market and our expectations," Whitman said.

On a more positive note, HP is also seeing growth in its networking business with year over year growth of 4 percent. Cloud is also doing well for HP, with Whitman noting that the company saw positive order growth in third quarter with the best performance in nine quarters.

"In our cloud product offerings, we are making progress with HP Helion," Whitman said. "Since launching in May, we’re seeing strong engagement from customers, and we’re extending our share leadership in private cloud."

Sean Michael Kerner is a senior editor at Datamation and InternetNews.com. Follow him on Twitter @TechJournalist

Tags: PC, earnings, Windows XP, HP

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