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HP's Storage Slowdown

HP, which recently reorganized its StorageWorks division, reported a solid set of second-quarter results today, although storage performance remains mixed. (See HP Reports Q2 Results, HP Creates New Biz Unit, HP Thinks Small, and HP Rethinks Storage Plays.)

The vendor's quarterly revenue was $25.5 billion, up 13 percent on the same period last year, just beating analyst estimates of $25.46 billion.

HP's earnings per share were 65 cents, down from 66 cents in the year-ago quarter. Net income, excluding a tax settlement gain, was up 27 percent to $2.1 billion in the second quarter of 2007. On a non-GAAP basis, net income was $2.3 billion, up 30 percent on the same period last year, also excluding a tax settlement gain. Non-GAAP earnings of 70 cents were up from 69 cents in the second quarter of 2006. Analysts had projected earnings of 33 cents.

The vendor's Enterprise Storage and Servers (ESS) division was a mixed bag in the second quarter. Overall revenues were $4.6 billion, up 8 percent over the prior year, with server revenues up 17 percent and blades up 58 percent. (See HP Intros Blade Service, FileX Joins HP BladeSystem Program, and Will Blades Cut Path for 10-Gig?)

Storage was a different story, with overall revenues growing just 1 percent. "Weakness in tape and the high end was offset by strong performance on the midrange EVA line," said CEO Mark Hurd during a conference call earlier today, explaining that EVA revenues grew 10 percent.

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