HP has announced that net revenue for its second fiscal quarter ended April 30 was $31,6-billion, up 3% from the prior-year period as reported and up 1% when adjusted for the effects of currency.

GAAP diluted earnings per share (EPS) was $1,05, up 15% from $0,91 in the prior-year period. Non-GAAP diluted EPS was $1,24, up 14% from $1,09 in the prior-year period. Non-GAAP financial information excludes after-tax costs of approximately $0,19 per share and $0,18 per share in the second quarter of fiscal 2011 and 2010, respectively, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges.
"HP executed well and delivered a solid quarter," says Léo Apotheker, HP president and CEO. "Our enterprise strategy, with services at its core, is focused on higher value-added solutions. Today we are accelerating our efforts to align our services business model to our long-term strategy to deliver unprecedented value to our customers and a better return for our shareholders."
Cathie Lesjak, HP executive vice-president and chief financial officer, adds: “In the second quarter, we saw continued strength in the enterprise with combined revenue from our commercial businesses up 8% year over year," said. "We again expanded our margins and increased both earnings per share and cash flow from operations double digits year over year."
Results were largely driven by performance in the commercial sector as businesses continued to spend on technology. HP experienced uneven consumer performance across its product categories during the quarter with continued softness in consumer PCs across all geographies.
Second quarter revenue was up 2% year over year in the Americas to $13,8-billion. Revenue was down 1% in Europe, the Middle East and Africa and up 10% in Asia Pacific to $11,7-billion and $6,1-billion, respectively. When adjusted for the effects of currency, revenue was up 1% in the Americas, flat in Europe, the Middle East and Africa and up 4% in Asia Pacific. Revenue from outside of the US in the second quarter accounted for 66% of total HP revenue. HP saw accelerated growth in BRIC countries (Brazil, Russia, India and China) with revenue increasing 19% while accounting for 12% of total HP revenue.
Personal Systems Group (PSG) revenue declined 5% year over year with a 5,7% operating margin. PSG remains the PC market leader in terms of units, revenue and profit share. PSG maintained its market leadership position in Commercial PCs, with Commercial Client revenue growth of 13% outpacing Consumer Client revenue decline of 23% in the quarter.
Imaging and Printing Group (IPG) revenue grew 5% year over year with a 17.0% operating margin. IPG continued to deliver strong performance across the business with share gains in all printing categories and 41% year-over-year growth in commercial printer hardware units. IPG continued to drive innovation and momentum with the new ePrint platform, graphic arts and other commercial print solutions.
Services revenue grew 2% year over year with a 15,2% operating margin. To improve long-term performance, HP is accelerating alignment of the services business with the company's overall strategy, including making investments to drive more value-added solutions and migration to the cloud.
Enterprise Servers, Storage and Networking (ESSN)revenue grew 15% year over year with a 13,8% operating margin. ESSN delivered a solid quarter with HP's innovative converged infrastructure products winning in the data centre. HP gained momentum in cloud with strong interest in and the successful launch of HP CloudSystem.
HP Software revenue grew 17% year over year with a 20.2% operating margin. HP Software revenue was driven by strong growth in licenses and services of 29% and 22%, respectively.
HP Financial Services revenue grew 17% year over year with a 9.4% operating margin. Financial Services continued to see its strong performance driven by both double-digit growth in lease volume and a healthy improvement in portfolio assets.
HP generated $4-billion in cash flow from operations in the second quarter. Inventory ended the quarter at $6,8-billion, with days of inventory up one day year over year at 26 days. Accounts receivable of $18,6-billion was up 10 days year over year at 53 days. Accounts payable ended the quarter at $14,2-billion, up three days from the prior-year period. HP's dividend payment in the second quarter resulted in cash usage of $182-million. HP also utilised $2,7-billion of cash during the quarter to repurchase approximately 64-million shares of common stock in the open market. HP exited the quarter with $12,8-billion in gross cash.
HP's revised outlook for the third quarter and the full year fiscal 2011 reflects an expected near-term impact from the Japan earthquake and related events, continued softness in sales of consumer PCs, and reduced operating profit expectations for Services.