Hewlett-Packard lifted by corporate demand
Hewlett-Packard, the world’s largest personal-computer maker, reported second-quarter profit and sales that beat estimates after corporate buyers replaced aging server computers and consumers took home new PCs.
Profit, excluding some costs, was $1.09 a share, Hewlett-Packard said today in a statement.
That compared with the $1.06 average of estimates compiled by Bloomberg. Sales rose 13pc to $30.8bn. Analysts projected $29.8bn.
Hewlett-Packard is seeing growth in demand for PCs and printers, which represent more than half of sales.
At the same time, corporate buyers are upgrading the servers used to run their businesses after delaying purchases last year.
Global spending on information technology will rise 5pc in 2010, with Hewlett-Packard, the world’s largest IT supplier, among the biggest beneficiaries, Goldman Sachs predicted.
“Their model, with the broadest coverage, looks like it’s working well in this tough environment,” Shaw Wu, an analyst with Kaufman Bros in San Francisco, said in an interview. He recommends buying the shares and doesn’t own any. “It’s the most complete technology company in the world.”
Profit this quarter will be $1.05 to $1.07 a share on sales of as much as $30bn, the company said. Analysts estimated profit of $1.07 and revenue of $29.7bn.
HP also raised its full-year earnings-per-share outlook to $4.45 to $4.50 from $4.37 to $4.44 previously.
It said sales for the year will increase 8pc to 9pc, which translates to $123.7bn to $124.9bn. In February, the company said full-year sales would be as much as $122.5bn.
Hewlett-Packard gained 2.4pc to $47.90 in late trading after falling 73 cents to $46.79 on the New York Stock Exchange. The stock has declined 9.2pc this year.
Net income in the quarter ended April 30 rose to $2.2bn, or 91 cents a share, from $1.72bn, or 71 cents, a year earlier, the company said.
Hewlett-Packard recaptured the PC market lead from Dell in 2006 and has worked to maintain its ranking by adding slimmer notebook models and introducing low-cost netbooks.
Chief Executive Officer Mark Hurd plans a foray into tablet-style computers that would compete with Apple’s iPad and he’s using acquisitions to expand into smartphones and the networking equipment market dominated by Cisco Systems.
“It’s just a broad-based, strong performance,” said Hurd, 53, who cautioned the results are compared with last year’s second quarter, which he called “the low point of the market.”
Hurd also discounted concerns that declines in the euro would affect sales. “A good euro is good for us, but I think sometimes the effect of the euro on HP gets overplayed.”
The European currency affects a fourth of the company’s sales, Chief Financial Officer Cathy Lesjak said on a conference call today. Its effect is “more muted” than some people may think, she said.
The euro, down 15pc this year amid the European debt crisis, dropped 1.5pc today to $1.2204.
HP faces challenges from rivals Acer, which overtook Dell last year to become the No. 2 PC maker, and Lenovo, which is winning buyers in China, according to Gartner.
Hewlett-Packard’s first-quarter PC shipment growth was 19.9pc, compared with 54.3pc for Acer, 21.4pc for Dell and 59.2pc for Lenovo, Gartner said.