Hewlett-Packard Profits Soar On Strong PC Sales

Posted by admin on May 19, 2010 · Leave a Comment

Hewlett-Packard on Tuesday reported that profits in the second fiscal quarter rose 28%, as consumers and businesses continued to spend more on computers.

Technology sector stocks saw mild gains Wednesday morning thanks to strength from the chip sector as well as Hewlett-Packard Co.., which posted a strong earnings report the previous afternoon.

Those gains offset weakness in the broader market, which saw the Dow slip 35 points on worries about consumer pricing and troubles in Europe.

The world’s largest PC maker said net income in the quarter ended April 30 increased to $2.2 billion, or 91 cents a share, from $1.7 billion, or 71 cents a share, the same period a year ago. Revenue rose 13% to $30.8 billion from $27.4 billion.

“HP had an exceptional quarter with strong performance across every region,” Mark Hurd, HP chairman and chief executive, said in statement.

HP, which managed to weather the economic recession last year better than Dell and other rivals, benefited from a stronger PC market, which has seen demand rising among consumer and businesses replacing aging laptops and desktops. Desktop and laptop shipments increased 20% in the quarter and revenue rose 21% to $10 billion. Revenue from laptops alone increased 17% and desktops 27%.

“We believe the company’s performance should be good enough to construct a backstop for the stock,” wrote Mark Moskowitz of J.P. Morgan, who noted that concerns about the health of the European economy that have weighed down the shares “is a macro issue, not just H-P’s.”

Indeed, HP’s results reflect the improvements in the PC market also seen by analyst firm Gartner. In March, the researcher raised its 2010 projected growth in worldwide PC shipments from 2009 to 19.7%, or 366.1 million units. Gartner also raised its revenue projection by 12.2% to $245 billion. The firm had predicted last December 13.3% growth in shipments and a 1.9% increase in revenue.

For the full fiscal year, HP forecast revenue growth of between 8% and 9%. Earnings based on generally accepted accounting principles were expected to fall in the range of $3.76 to $3.81 a share, down from the company’s previous forecast of $3.79 to $3.86 a share.