HP delivers strong sales in 3rd quarter

Hewlett-Packard hpq reported impressive quarterly results Tuesday, but warned that strong sales are not necessarily a sign that the troubled economy is bouncing back.

The No. 1 PC maker reported $28 billion in revenue in its third fiscal quarter, ended July 31. The results were up 10% from $25.4 billion a year ago — and they beat Wall Street expectations.

"That says more about our performance than any material change we saw in the environment," CEO Mark Hurd said. The company has seen little change in the economy since February, he said.

The solid results were enough to soothe many worried investors. HP shares rose 2.8% to $44.90 in after-hours trading on the news, released after markets closed. "It's a confirmation that fundamentals in the PC market continue to be healthy despite all the macro-economic pressure," says equity analyst Brent Bracelin at Pacific Crest Securities.

Every one of HP's divisions posted growth. Net income of $2 billion, or 80 cents a share, rose from $1.8 billion, or 66 cents a share, a year ago.

There were a few glitches. HP's lucrative printer division grew only 3%. "There was also a bit of a slip in server and storage profitability," Bracelin says. "But these are small little nitpicks."

HP has done a good job of broadening its portfolio beyond its core PC, server and printer markets, says tech analyst Stephen Baker at researcher NPD. It has boosted software offerings and plans to close a $13.9 billion merger with technology services firm Electronic Data Systems later this month.

In the current quarter, HP expects revenue of $30.2 billion to $30.3 billion, slightly below Wall Street estimates.

HP does 68% of its business outside the USA. Sales in the HP's Americas division, which includes North and South America, grew 4%. When adjusted for currency fluctuations, sales rose 8% in Asia Pacific and 5% in Europe, the Middle East and Africa.