Following the announcement of its acquisition of networking equipment manufacturer 3Com earlier this month, technology giant HP reported substantial year-over-year income growth in the last quarter of the company's fiscal 2009. The company's revenue dropped from the same quarter one year ago but it managed to grow its operating margin.

HP's enterprise server and storage business revenue was down 17 percent year over year - reporting $4.2 billion in sales in the fourth quarter of 2009. Within the category, storage revenue declined by 20 percent, industry-standard server revenue dropped by 10 percent and business critical systems revenue declined by 33 percent, according to an HP statement. The company's blade-server revenue was down eight percent.

Its services division showed better results, reporting an eight-percent upswing in revenues from the same period one year ago. Making up the $8.9 billion in sales gained by HP's services business, infrastructure technology outsourcing brought in $4.1 billion and the rest made by technology services, application services and business process outsourcing.

HP CEO Mark Hurd said in a conference call that much of the increase in services revenue was due to the completion of integration of EDS - a technology services firm HP bought in August 2008. Only recently has the company been integrated and Hurd said HP was now only beginning to leverage the new asset.

Hurd also commented on the recent announcement of an agreement to purchase 3Com for about $2.7 billion.

"We've had a strategy around converged infrastructure for some period of time," he said about adding 3Com's networking equipment to HP's comprehensive IT offering. "The best technology we saw on the planet to complement our portfolio was 3Com. We found exciting technology that we think can make a big difference on the market."

HP's existing networking business is called ProCurve and the company plans to leverage it along with 3Com to strengthen its position in the market dominated by Cisco. Besides networking, both companies are also competing in the space for comprehensive full-stack IT solutions for enterprises.

Earlier this month Cisco announced a new partnership with EMC and VMware to provide a full-stack computing, storage, networking and virtualization solution called Vblock.

Hurd said that HP's Virtual Connect Enterprise Manager software, along with its robust supply chain add to its strength in the market. The 3Com acquisition also strengthens HP's foothold in the Chinese market - where the networking vendor is a major player.

HP's total revenue in the fourth quarter ending Oct. 31 was $30.8 billion - down eight percent from the same quarter one year ago. The company reported net earnings of $2.4 billion - a 14-percent increase from $2.1 in the fourth quarter of 2008.