HP sees profits soar 38 percent

20-02-2008

by Deirdre McArdle

Hewlett-Packard's quarterly results have given tech investors reason to smile as the computer maker posted a 38 percent jump in profits and raised its outlook.

The PC manufacturing giant recorded profits of USD2.1 billion for its first fiscal quarter of 2008, up from USD1.5 billion in the year ago quarter. Earnings per share increased by 45 percent year-on-year from USD0.55 in Q1 2007 to USD0.80 in Q1 2008. Excluding charges from past acquisitions, HP said it would have earned USD0.86 per share, which was ahead of Wall Street's estimate of USD0.81.

In the current economic gloom and cautious outlooks from other tech heavyweights such as Intel and IBM, HP's better-than-expected results stand out. The firm posted revenue of USD28.5 billion in the quarter, up 13 percent on the year-ago figures. This is well ahead of the average analyst predictions of USD27.6 billion.

HP cited strong sales of notebooks as a key element of its impressive results. Notebook revenue for the quarter jumped 37 percent year-on-year while desktop revenue grew 15 percent.

Markets outside the US continue to be profitable for HP, which saw its revenues in EMEA and Asia grow 15 percent and 22 percent, respectively. Meanwhile, sales in the Americas increased by 8 percent year-on-year.

HP's software division grew 11 percent over the prior-year period to USD666 million, while its Enterprise Storage and Servers (ESS) unit reported revenue of USD4.8 billion, up 9 percent on the year-ago quarter.

Along with its market-beating results HP raised its outlook. The firm expects its second quarter revenue to be approximately USD27.7 billion to USD27.9 billion, and full year revenue to be between USD113.5 billion to USD114 billion. Analysts had predicted second quarter revenue of USD27.4 billion and full year revenue of USD111.7 billion.

"We are raising our guidance yet again, reflecting our confidence in anticipated cost reductions and share gains in key markets," said Mark Hurd, HP chairman and chief executive officer. "We added more than 2,000 sales positions in the past year through acquisitions and hiring. HP remains well positioned for profitable growth as we continue to focus on our numerous cost initiatives and improve our market coverage."