HP's 1Q Profit Rises 38 Percent
(AP Online Via Thomson Dialog NewsEdge) SAN FRANCISCO_Hewlett-Packard Co. delivered a fiscal first-quarter profit above analyst expectations and brightened its outlook for the rest of the year, providing a ray of high-tech hope amid the gathering economic gloom.
The encouraging news drove up HP's stock price by 5 percent late Tuesday.
The Palo Alto-based maker of computers and printers said it earned $2.13 billion, or 80 cents per share, for the three months ended in January. That represented a 38 percent increase from net income of $1.55 billion, or 55 cents per share, in the same period a year earlier.
If not for expenses stemming from past acquisitions, HP said it would have earned 86 cents per share. That figure exceeded the average estimate of 81 cents per share among analysts surveyed by Thomson Financial.
Revenue for the period totaled $28.5 billion, a 13 percent increase from the previous year. Analysts, on average, had forecast revenue of $27.6 billion.
More than two-thirds of HP's revenue flowed from markets outside the United States, where the weak dollar has become into a sales catalyst. If not for favorable currency fluctuations, HP said its first-quarter revenue would have been up by a more modest 8 percent.
Management predicted HP will fare better than analysts had been anticipating for the remainder of its fiscal year. Excluding certain one-time expenses, HP expects to earn from $3.50 to $3.54 per share for the year ending in October, outstripping the previous analyst estimate of $3.36 per share, according to Thomson Financial.
HP, the world's largest technology company by revenue, has been consistently delivering pleasant surprises since Mark Hurd took over as chief executive nearly three years ago. This marks the 10th consecutive quarter in which Hurd has raised the bar for the company's future performance.
"Going forward, I am confident in our ability to deliver stronger results," Hurd assured analysts during a Tuesday conference call.
Hurd indicated his optimism has more to do with his faith in HP's own strategy and strength in international markets than in the ability of the U.S. economy to avoid a recession.
To ensure HP hits its earnings targets, Hurd pledged to wring out even more expenses after several years of cost cutting that included thousands of buyouts and layoffs.
Escalating worries about the weakening economy have been punishing high-tech stocks in recent weeks as industry bellwethers like Google Inc., Apple Inc., Intel Corp. and Cisco Systems Inc. either released disappointing quarterly profits or tepid forecasts.
HP joined fellow high-tech heavyweights Microsoft Corp. and IBM Corp. in producing quarterly earnings and forecasts that painted a somewhat rosier picture.
Investors rewarded HP by pushing up its stock price $2.20 in Tuesday's extended trading. The shares had gained eight cents to finish at $43.95 in the regular session.
American Technology Research analyst Shaw Wu cautioned against using HP to read the financial temperature of the entire tech industry. "I think this (quarter) is more indicative of what Mark Hurd has done to instill a culture of success and execution at HP."
Since Hurd's arrival, HP's market value has doubled, creating more than $50 billion in shareholder wealth, while the company surpassed rival Dell Inc. to become the world's top seller of personal computers.
Shipments in HP's computer division climbed 27 percent in the first quarter.
But HP's printer sales are weakening, with shipments aimed at the consumer market slipping 2 percent in the first quarter. Selling printers is important to HP because sales of the ink used in them bring in double the income that computer sales do.
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