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HP profit rises 14% on computer sales

Its revenue increases 10% from a year ago as it keeps its spot as the No. 1 PC seller globally.

August 20, 2008|Michelle Quinn | Times Staff Writer

SAN FRANCISCO — Hewlett-Packard Co. rose above the economic gloom Tuesday and reported a 14% rise in quarterly profit thanks to strong computer sales.

For its fiscal third quarter ended July 31, the Palo Alto-based technology giant posted $28 billion in revenue, up 10% from $25.4 billion in the same quarter last year.

The company said it had profit of $2.2 billion, compared with $1.9 billion a year earlier. Excluding acquisition costs, earnings per share reached 86 cents, beating by 3 cents a consensus estimate from analysts surveyed by Thomson Reuters.

"This was a good quarter for us," HP Chief Executive Mark Hurd said. "These results further demonstrate our global reach, diverse customer base and broad portfolio of products and services."

The firm said its revenue during the current quarter would be at least $30.2 billion, more than what analysts expected.

In after-hours trading, HP shares jumped more than 3% after ending the day at $43.69, down 91 cents, or 2%.

"It's a bit of a sigh of relief that the fundamentals for the largest technology company in the world held in there," said Brent Bracelin, a senior analyst with Pacific Crest Securities. "Guidance suggests that demand for computers remains healthy and stable."

HP said that revenue from its personal systems division, which sells computers, grew 15%. The company shipped 37% more laptops than in the same quarter last year and maintained its spot as the No. 1 PC seller globally. HP has 19% of the worldwide market compared with Dell Inc.'s 16.4%, according to research firm IDC.

In the U.S., Dell is still the No. 1 PC seller with 32% of the market. HP follows with 25%.

HP said that 68% of its revenue came from outside the U.S. Revenue from Brazil, Russia, India and China grew more than 24%. American Technology Research analyst Shaw Wu said companies with a global presence and broad product line such as HP and IBM Corp. were weathering the economic climate well.

"Two words sum it up -- 'global' and 'diversified,' " he said.

Business was a lot slower in the United States. When adjusted for currency, HP's revenue grew 3% in the Americas, down from 13% growth a year earlier.

Hurd said he saw "renewed strength" in demand for computers and servers as U.S. corporations revamped their infrastructure.

Another area of slowing growth was HP's old stronghold -- printers. Revenue was up 3% to $7 billion. The company shipped 13 million printers, a 2% drop from the previous year.

Hurd also said that the firm continues to cut costs. But he may face his biggest challenge yet. In May, HP announced it would acquire Electronic Data Systems Corp., the Plano, Texas-based technology outsourcing company, for $13.2 billion in cash. The deal is expected to close this month.

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michelle.quinn@latimes.com

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