Hewlett-Packard Profit Climbs on Strong Printer, PC Sales

Wednesday, 21 Feb 2007 | 9:47 AM ET

Hewlett-Packard posted a higher quarterly profit, helped by strong performances in its printer and personal computing businesses.

Excluding one-time items, profit for the company's fiscal first quarter rose to $1.826 billion, or 65 cents a share. Revenue rose 11% to $25.1 billion from $22.7 billion.

HP Earnings
A reaction to HP's earnings, with Brent Bracelin, Pacific Crest Securities analyst and CNBC's Carl Quintanilla

Consensus estimates had put the technology bellwether's quarterly earnings at 62 cents a share on sales of $24.3 billion, according to Thomson Financial. In the same period last year, HP earned 48 cents a share.

HP shares edged downward slightly in postmarket trading from their close of $43.13 on the New York Stock Exchange.

Including charges, net income for the quarter climbed to $1.55 billion, or 55 cents a share, from $1.23 billion, or 42 cents per share, a year ago.

The world's biggest maker of personal computers and printers said in November it expected first-quarter net earnings per share of 55 cents to 57 cents on revenue of $24.1 billion to $24.3 billion.

In the calendar fourth quarter, HP continued to take market share from longtime rival Dell , which has stumbled in recent quarters and where founder Michael Dell took over as CEO again, replacing Kevin Rollins. Market research firm IDC said HP's PC unit shipments rose 24% in the fourth quarter, the fastest for HP since 2000.

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Shares of HP have risen about 4% in 2007. The stock trades at 14.7 times its forecasted earnings per share for fiscal 2008, compared with 13.5 times for rival IBM .

For the current second quarter, HP said it expects earnings per share -- excluding 6 cents a share for amortization of purchased intangible assets -- of 63 cents to 64 cents a share on revenue of about $24.5 billion.

Thomson estimates for the current quarter stand at 63 cents a share on revenue of between $23.7 billion and $24.5 billion.

Margin Improvements on Printers, Computers

HP said revenue in its imaging and printing business, a mainstay of its profits, rose 7% to $7 billion from a year ago, and the unit had an operating profit margin of 15.3%, up from 14.9% a year earlier.

HP's PC business, which includes desktop PCs, workstations and notebook computers, saw revenue rise 17% to $8.7 billion, and operating profit margin improve to 4.7% from 3.9%.

HP's services revenue increased 5% to $3.9 billion from the year-ago period.

Revenue at its storage and server business rose 5% to $4.5 billion, while operating profit margin in the unit rose to 9.3% from 7.7%.

Software revenue climbed 81 percent to $550 million after HP bought Mercury Interactive last year.

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