IBM watch out a threat behind you

Slashdot It! Hewlett-Packard has taken a big step toward laying official claim to the title of world's biggest tech company. On Nov. 16 the company reported fourth-quarter earnings that, thanks to all its business units performing well, exceed the annual sales IBM is expected to post in its fourth quarter, which ends Dec. 31. "This has been a defining year for HP," a buoyant Chief Executive Mark Hurd told reporters during a conference call. And no, he wasn't referring to the pretexting scandal that dominated headlines earlier this fall.

Instead, Hurd was discussing fourth-quarter results that put to rest many of the questions that have dogged HP in recent years. For the past decade, investors and industry analysts have wondered whether the company had become too diverse to be manageable. For a lot of those years, nearly all of the company's profits came from its printer business—or more specifically, its hugely profitable ink cartridge business. But this quarter, all of the company's main businesses more than pulled their weight.

Even HP's inconsistent corporate computing arm, a frequent money-loser in the past, delivered a 42% increase in operating profits, on 4% revenue growth, to $4.7 billion for the quarter. And two of HP's historic weak spots—PCs and software—showed impressive gains. The PC unit recorded revenue growth of 10%, while sales for the software unit grew 14% for the quarter. Says Hurd: "This was one of the most balanced financial performances we've delivered in a long time."

The result is a company on a roll. Overall revenues grew 7.2%, to $24.6 billion for the quarter, impressive for a company the size of HP. For the year, HP pulled in sales of $91.7 billion, a 6% increase. That's a smidgen ahead of IBM's projected annual sales, making HP tech's biggest player. HP generated $11.4 billion in cash for the year, up from $3.3 billion the year before. That leaves it with $16.4 billion in cash, up from $13.9 billion at the end of the previous year.

Hurd raised HP earnings targets for the first fiscal quarter of 2007, making it the fourth time in the past five quarters he has done so. HP now expects first-quarter sales to be around $24.2 billion, with full-year 2007 sales expected to come in at $97 billion, or 5.7% higher than fiscal 2006.