(Adds CEO quote, analyst comment)
SAN FRANCISCO Nov 19 (Reuters) - Hewlett-Packard Co (HPQ.N), the world's largest personal computer maker, issued a better-than-expected quarterly profit and outlook on Monday, driven by strong sales of notebook computers.
HP also announced an $8 billion additional share buyback program, but market reaction was muted by uncertainty over how much the U.S. credit crisis will hurt technology demand in coming months. HP shares rose 1.4 percent in extended trading to $50.15.
The results came after International Business Machines Corp (IBM.N) and Cisco Systems Inc (CSCO.O) warned of weakness in orders from U.S. financial institutions, which are mired in mortgage-related losses.
Chief Executive Mark Hurd told reporters on a conference call that HP saw a "fairly steady environment" in its fiscal fourth quarter, which ended on Oct. 31, helped by lower computer component prices.
"We do not have a huge exposure to the financial services industry," Hurd said. "We saw no change in spending in financial services in the quarter."
Net income in the quarter rose 28 percent to $2.16 billion, or 81 cents per share, from $1.7 billion, or 60 cents per share, a year earlier, HP said. Earnings before items was 86 cents per share, beating the average Wall Street forecast of 82 cents, according to Reuters Estimates.
Revenue grew 15 percent to $28.3 billion, compared with the average analyst forecast of $27.4 billion. Sales were helped by a 49 percent jump in notebook PC revenue.
"Great numbers, great quarter," said Brent Bracelin, an analyst at Pacific Crest Securities. "This stock has been one of the best performing stocks in the past two years."
When asked about the muted share reaction, Bracelin said: "I can't explain the disconnect other than that people are very worried about spending on IT."
Palo Alto, California-based HP last year overtook Dell Inc DELL.O as the largest maker of personal computers after three years of lagging behind its Round Rock, Texas-based rival. Hurd has focused on selling laptops and printers in stores and in markets outside the United States, areas where Dell lagged.
HP, which has a market value of about $130 billion, said revenue in its personal systems group, which includes PCs for businesses and consumers, rose 30 percent to $10.1 billion in the quarter.
It had benefited from lower prices for computer memory chips and other components, although HP said such costs may be moderately less favorable in the current quarter.
"The pricing environment is expected to be generally favorable, although maybe a little bit less than in Q4," Hurd told analysts. "There's tightness in some categories, but in other categories, there's pretty ample supply."
HP forecast fiscal first-quarter earnings per share before items of 80 cents, beating the average Wall Street forecast of 77 cents, according to Reuters Estimates. HP saw first quarter revenue ranging from $27.4 billion to $27.5 billion, versus the average expectation of $27.04 billion.
For the full 2008 fiscal year, HP forecast earnings per share of $3.32 to $3.37 before items and revenue of about $111.5 billion. Analysts, on average, expect full-year earnings of $3.26 per share and revenue of $109.8 billion.
HP has cut costs and expanded high-profit businesses such as software and technology services. Software revenue doubled to $698 million after HP bought Mercury Interactive Corp a year ago for about $4.9 billion.
"It looks like the cost cutting has helped. Software is growing. It once again points to the CEO who has been there two years continues to turn things in the right direction," said Richard Sichel, chief investment officer of Philadelphia Trust Co. "I think they will continue to surprise on the upside."
HP's imaging and printing group, which includes printers and printer supplies, saw revenue growth of 4 percent to $7.6 billion. Revenue from server computers and data storage systems rose 10 percent, helped by strong sales of so-called blade servers designed to save space and energy in data centers.
HP shares have risen about 21 percent so far this year to trade at about 18 times estimated fiscal 2007 earnings, compared with Dell's multiple of 19 and IBM's 15. (Additional reporting by Scott Hillis and Daisuke Wakabayashi, editing by Braden Reddall and Andre Grenon)