SYSTEMS

HP Enterprise Systems revenue was $3.9 billion, up 3% sequentially on strong growth in the Americas and Japan. Growth was led by industry-standard servers, up 7% sequentially, and storage, up 5% sequentially. Business-critical server revenue was down 4% sequentially, less than the broader UNIX(R) market. Software revenue was down 2% sequentially due to continued softness in the telecommunications market. Enterprise Systems reduced its operating loss to $7 million during the quarter from $83 million last quarter -- a 92% improvement. The group's operating loss was 0.2% of revenue, compared to a 2.2% loss last quarter. The quarter's highlights include the launch of 70 new and enhanced products; growing software support and customer adoption for Itanium 2-based systems; a significant turnaround in HP NonStop server sales; and another record for HP Superdome server shipments and strong HP StorageWorks Enterprise Virtual Array storage sales, including the largest Superdome win to date with the China State Administration of Taxation. In recent weeks, Enterprise Systems also announced two moves in conjunction with HP Services to accelerate growth: 1) An organizational realignment that integrates enterprise hardware groups, streamlines operations and builds a tighter go-to-market partnership with HP Services; and 2) The launch of the HP Adaptive Enterprise strategy, backed by new software, services, solutions and the Darwin Reference Architecture to help businesses measure, architect and manage change by creating a tighter linkage between business and IT.