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HP yesterday released both fourth quarter and full-year financial results for its fiscal 2018. Overall, the numbers were strong. Results for the company’s Personal Systems division were even stronger.

For the fourth quarter, HP reported overall revenue of $15.36 billion, marking a year-on-year increase of 10%. But its Personal Systems division — which includes notebooks, desktops and workstations — grew revenue by an even higher 11%, hitting $10.1 billion.

For the full fiscal year, the story was similar. HP’s FY18 revenue was $58.47 billion, a year-on-year increase of 12%. Personal Systems revenue for the full fiscal year grew by an even higher 13%, reaching $37.66 billion.

Profits for HP’s Personal Systems group looked good, too. For Q4:18, HP’s PC sales of $10.1 billion delivered an operating profit of $378 million. That’s a margin of nearly 4%.

Market share is important to HP, too. The company is quite pleased with its share of the global PC market, which hit 22.8% in Q3 of the calendar year, according to market watcher IDC.

“It was a strong quarter and an exceptional year,” HP CEO Dion Weisler told stock analysts on a conference call last night. “We’ve done what we said we would do. I’m very proud of that.”

Higher prices boost revenue

Prices for HP’s PCs have been rising. That explains how the Personal Systems group’s Q4:18 revenue rose 11% while unit shipments rose just 6%.

This played out in both notebooks and desktops. In HP’s Q4:18, notebook unit shipments rose 8% year-on-year, but revenue rose by an even faster 14%. Same thing for desktops: unit shipments in Q4 rose just 2%, but they raised revenue by a higher 6%.

As the following chart, courtesy of HP, shows, the company’s PC business is dominated by notebooks, accounting for nearly two-thirds of the Personal Systems group’s Q3:18 revenue:

HP Q3:18 PC revenue by device type

Looking ahead to 2019, HP officers say they’re concerned about 2 big factors: U.S. tariffs on China, a major supplier of PC hardware; and constrained CPU availability, which they say affects both low-end and high-end systems.

Are either or both of these factors leading channel partners to stockpile inventory?

That question was raised during last night’s conference call by one of the attending stock analysts. CEO Weisler answered that while the “demand signal” for PCs is strong, how much of that is for inventory build-ups remains unclear. Stay tuned.


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