By Trevor Shackelford August 22, 2005 -- Hewlett-Packard (NYSE: HPQ) reported stronger than expected operating results today. Revenue for the quarter was up 10% to $20.8 billion from $18.9 billion last year. GAAP net income was $100 million, or $0.03 per share, down 88% from the third quarter of 2003. The decrease was primarily driven by the tax impact of a planned Q3 and Q4 cash repatriation of $14.5 billion. Non-GAAP net income was $1.1 billion, up 46% from the same period last year. Operating margins were 5.7%, up from 4.5% last year. Topics of this Summary: Quarter Highlights Segment Performance Guidance Raine Radar Q & A Quarter Highlights The company announced a $14.5 billion cash repatriation from foreign earnings HP acquires the majority of assets from large format printer manufacturer Scitex Vision Company unveils new scalable print technology Segment Performance Imaging and Printing Group The segment posted quarterly revenue of $5.9 billion, up 5% from last year. Color laser and multi-function printers saw the largest revenue increase during the quarter, but consumer and commercial hardware sales were also up. Revenue from supplies grew 6%. Operating profit was $771 million, or 13.0% of revenue, down from a profit of $836 million in the prior-year period. Personal System Group The segment revenue grew 8% year-over-year to $6.4 billion. Gains were driven primarily by notebook sales. PSG reported an operating profit of $163 million, or 2.6% of revenue, up from a profit of $23 million in the prior-year period. The group seemed to have fewer problems with pricing pressure this quarter than competitors Dell and Gateway. Enterprise Storage and Servers ESS reported revenue of $4.0 billion, up 20% over last year. ESS showed an operating profit of $150 million, or 3.8% of revenue, up from a loss of $211 million in the prior-year period. HP Services HPS revenue increased 10% to $3.8 billion from last year. Managed Services revenue grew 21%, Technology Services grew 7% and Consulting and Integration grew 12%. Operating profit was $256 million, or 6.7% of revenue, down from a profit of $314 million in the prior-year period. Software Software reported quarterly revenue of $249 million, an increase of 11% year-over-year. The segment reported an operating loss of $40 million, compared with a loss of $48 million in the same period last year. Financial Services HPFS reported revenue of $489 million, essentially flat year-over-year. Finance volume was up 4% from last year. Operating profit was $58 million, or 11.9% of revenue, up from a profit of $42 million in the prior-year period. Guidance HP anticipates Q4 revenue to be between $22.4 - $22.8 billion, with non-GAAP earnings per share between $0.44 and $0.47. Raine Radar It appears as though the investor community is pleased with HP’s new direction. The company has created intelligently targeted pricing models within the print and PC business. By doing so, the company is able to extricate itself from competing purely on a low cost basis. This allows the company to absorb some of the increased component costs without losing its margins. It seems as though after years of following Dell, HP is starting to find its own model in PC’s. Instead of being the low-cost PC provider, become the premium laptop manufacturer and cater to power users. With that news and the addition of a new scalable inkjet print technology, the company is generating the buzz it so badly needed. Q & A Mark Hurd credits the improvement in performance at HP to a general refocusing at the company. Hurd pointed out that the improvement in the personal systems business is not isolated to this quarter but has been on a steady incline for the last year or more. The other major contributor to growth was the recently refreshed notebook line. The company is pleased with its performance in printing and PC and will continue with its current strategy for both of those business segments. HP is pursuing targeted pricing for its printer businesses, in many cases opting not to attempt to be the “price” leader. The company continues to focus on 13%-15% operating margin as the best forecast for profitability in IPG. HP saw “good growth” across all regions, although there are some concerns about what the effect of the Euro will be going forward.