HP profit rises as notebook PC sales grow
SAN FRANCISCO (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 October 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."
COMPONENT COSTS
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. Continued...
