Hewlett-Packard posts 'pretty darn strong' earnings
SAN FRANCISCO -- Hewlett-Packard HPQ issued a rosy earnings report Tuesday that seemed to ask, "What economic slowdown?"
The No. 1 PC maker reported revenue of $28.5 billion in the quarter ended Jan. 31. The numbers rose more than 13% from $25.1 billion a year ago and beat Wall Street estimates.
Despite fears of a pullback in U.S. tech spending, sales in the Americas rose a solid 8%. U.S. consumer sales "were probably not quite as robust as we've seen in the past," CEO Mark Hurd said. But, overall, HP's results were "pretty darn strong," Hurd said.
They're expected to remain so. In the current quarter, HP forecast revenue of $27.7 billion to $27.9 billion.
The news, released after market close, sent shares up 5% in after-hours trading.
Hurd's optimism was a bit of a surprise. Other big tech companies, including Intel intc and Cisco Systems csco, recently issued conservative earnings forecasts, saying that their customers are worried about the economy.
Hurd warned that his company may not be a perfect economic indicator, because it is in the middle of a multiyear restructuring that began when he joined HP in 2005. Changes include the hiring of 2,000 additional sales staffers in the past year and the consolidation of operations to cut costs.
Such reductions helped HP report net income of $2.1 billion, or 80 cents a share, up from $1.6 billion, or 55 cents a share, a year ago.
Some of the strongest results came from HP's PC division, which posted a 24% increase in revenue. Operating profit was $628 million, an impressive number for a unit that often lost money in the past.
HP warned that the division probably can't keep growing at that rate. Higher component costs in the current quarter are expected to cut into profit.
The results are a sign that HP continues to take share from rivals, especially No. 2 Dell dell. HP has about 18% of the worldwide PC market compared with about 14% for Dell, researcher Gartner says. Price battles in the hypercompetitive PC industry were "fairly tame," Hurd said.
"HP has the momentum now," says tech analyst Roger Kay at Endpoint Technologies Associates.
Other divisions also posted gains. HP's printer group increased revenue by 4%, while its back-end server and storage group grew 9%.
Hurd emphasized that much of HP's gains came outside the USA. Sales in four key emerging markets — Brazil, Russia, India and China — jumped 35% and account for 9% of HP's overall revenue. Europe, the Middle East and Africa also posted gains.