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Storage Shines for HP

Storage and blade servers highlighted HP's positive third quarter, the clearest sign yet that the vendor is moving beyond its turnaround status and into real growth. (See HP Announces Earnings.)

HP's Enterprise Storage and Servers (ESS) division reported revenues of $4.1 billion, up 3 percent on the same period last year. Although HP did not break out specific figures, revenues from the firm's midrange EVA line were up 17 percent on the same period last year, and networked storage was up 5 percent, led by sales of external arrays.

Blade server results were also strong, with revenues rising 37 percent year over year. (See HP Brandishes Blades and HP Unveils Blade Design.) "Our business reflects what we see going on in market trends," explained HP CEO Mark Hurd during last night's conference call. "Lots of people are going to virtual servers, which means a lot of blades."

HP's traditional server business presented more of a mixed bag. Revenues from the vendor's business-critical systems operation, which includes PA-RISC and Alpha servers, fell 6 percent, although revenue from Integrity devices rose 76 percent year over year.

This can be attributed to the ongoing decline of the Unix market and significant unease among end-users, according to Daniel Renouard, an analyst at Robert W. Baird & Co. "We believe enterprise concern over HP's mid- [to] high-end server product roadmap is a primary driver of the weakness," he wrote in a guidance note released this morning.

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