HP sees stronger-than-expected 2009, shares up

By Tiffany Wu and Paul Thomasch

NEW YORK (Reuters) - Hewlett-Packard Co (HPQ.N) posted stronger-than-expected results and forecast full-year profit above Wall Street estimates, underscoring its resilience to an economic crisis that has dragged down other tech companies.

HP shares surged more than 14 percent as preliminary October quarter results suggested the world's largest-maker of personal computers was winning market share and benefiting from recurring revenue streams from services and printing supplies.

HP has lost about a third of its market value in the last two months on fears of a sharp slowdown in PC spending, which had increased after chip giant Intel Corp (INTC.O) shocked markets with a revenue warning last week and electronics retailer Best Buy Co Inc (BBY.N) slashed its outlook.

"HP is gaining market share in an extremely strong competitive position. They've got share gains, combined with very aggressive cost reduction," said Shannon Cross of Cross Research.

"It's very prudent management of their resources and that's allowed them to put out numbers that are ahead of the Street even in this economic environment," she said.

HP's preliminary net profit in the fiscal fourth quarter that ended October 31, was 84 cents per share, or $1.03 excluding items such as restructuring and acquisition charges.

Analysts were looking for earnings per share of $1.00, excluding items, according to Reuters Estimates.

Fourth-quarter revenue rose 19 percent to $33.6 billion, or an increase of 16 percent when adjusted for currency effects, compared with the average analyst estimate of $33.1 billion.

The company forecast fiscal 2009 earnings excluding items of $3.88 to $4.03 per share, which beat the average Wall Street estimate of $3.86, according to Reuters Estimates.

HP, which is scheduled to post full results next Monday, did not detail which parts of its hardware, software or services units were strong, saying only that it was benefiting from its global reach, diverse customer base and cost cuts.

It said in September it would lay off 24,600 employees following its acquisition of Electronic Data Systems. HP also said on Monday it would extend its planned one-week holiday shutdown by an additional week to save costs.

DOWNSIDE RISK

HP's outlook initially bolstered the Nasdaq and other tech shares, including rivals Dell Inc (DELL.O) and IBM (IBM.N), but the rally lost steam due to persistent concerns about the worsening global economy.

Analysts also warned investors against too much optimism, saying HP was likely to outperform other tech companies.

"The threat of a consumer pullback is real and present. It's unlikely that companies large and small can sidestep the structural weakness on the consumer side," said Ashok Kumar, analyst at Collins Stewart. "But those with a broader portfolio -- like Hewlett-Packard and IBM -- will be able to weather the storm better than the likes of Dell."