Hewlett-Packard Fourth-Quarter PC Sales Top Estimates
By Connie Guglielmo
Nov. 23 (Bloomberg) -- Hewlett-Packard Co. reported personal-computer sales that topped some analysts’ estimates after the company took market share from Dell Inc. and benefited from surging demand in China.
PC sales in the fourth quarter ended Oct. 31 were $9.86 billion, a 12 percent drop from a year earlier and a 17 percent increase from the previous three months, Hewlett- Packard said today in a statement. On Nov. 11, the company reported revenue and profit that topped analysts’ estimates.
Hewlett-Packard took the PC lead from Dell in 2006 by cutting prices and introducing thinner, more stylish designs. Dell fell to No. 3 in the global market last quarter and reported earnings this month that missed analysts’ projections. Under Chief Executive Officer Mark Hurd, Hewlett-Packard has also expanded through acquisitions, including the $2.7 billion buyout of 3Com Corp. announced this month.
“Dell continues to lose share,” said Shaw Wu, an analyst with Kaufman Bros. in San Francisco. He rates Dell “hold” and recommends investors buy Hewlett-Packard shares. “One of the reasons we like H-P is that it’s diversified -- PCs are only 30 percent of the company and they have printers, servers, software and services.”
Toni Sacconaghi, a Sanford C. Bernstein & Co. analyst in New York, had estimated PC sales last quarter of $9.73 billion.
Quarterly Profit
Fourth-quarter net income rose 14 percent to $2.41 billion, or 99 cents a share, from $2.11 billion, or 84 cents, a year earlier, Hewlett-Packard said today. Profit, excluding some items, was $1.14 a share. Sales fell 8.4 percent to $30.8 billion. Before Hewlett-Packard announced preliminary results this month, analysts had projected profit of $1.11 and sales of $29.8 billion.
Chief Financial Officer Cathie Lesjak said average selling prices of PCs stabilized in the quarter.
Hewlett-Packard, which gets 64 percent of it revenue from outside the U.S., said sales in China rose more than 20 percent.
Hewlett-Packard, based in Palo Alto, California, fell 27 cents to $50.75 in after-hours trading, after climbing 98 cents to $51.02 at 4 p.m. on the New York Stock Exchange. The shares have gained 41 percent this year.
Revenue from printers and supplies, such as ink, dropped 15 percent to $6.45 billion. Printer shipments fell 20 percent. Profit from that business was $1.17 billion, yielding a margin of 18.1 percent compared with 15.3 percent a year earlier.
‘Low on Inventory’
“We felt good about imaging and printing as we closed the quarter,” Hurd said in an interview. “We exited the year pretty low on inventory -- we saw higher demand for printers as we went through the end of the year.”
The company expects double-digit unit growth in the printer division this quarter.
Fourth-quarter revenue in Hewlett-Packard’s server and storage business declined 17 percent to $4.22 billion.
Hewlett-Packard increased services revenue 7.8 percent to $8.93 billion, buoyed by the acquisition last year of Electronic Data Systems Corp. The profit margin was 16.2 percent, compared with 11.4 percent a year earlier.
Hewlett-Packard signed new services contracts with customers including Coca-Cola Co., Alcatel-Lucent SA, and Eli Lilly & Co., Hurd said. “A story within the story with services was the strength of the signings in the quarter,” Hurd said.
The company reiterated its first-quarter forecast for sales of as much as $29.9 billion and profit excluding acquisition and restructuring-related costs of $1.03 to $1.05 a share.
Market Share
Hewlett-Packard captured 20.2 percent of the worldwide PC market in the third quarter, up from 18.9 percent a year earlier, according to researcher IDC in Framingham, Massachusetts. Acer Inc. passed Dell to take second place with a 14 percent share. Round Rock, Texas-based Dell, the only one of the three biggest PC makers to see its shipments fall, had a 12.7 percent share of the global market, down from 14.2 percent a year ago, IDC said.
Hurd, 52, is also expanding businesses that yield higher profits than PCs and printers. Hewlett-Packard said it bought Marlborough, Massachusetts-based 3Com to bolster its ProCurve networking business and expand sales of computer gear for corporate data centers.
Adding 3Com increases competition with San Jose, California-based Cisco Systems Inc., the world’s largest maker of network equipment.
Hurd said the 3Com takeover is part of a long-term plan to deliver a package of software, services, servers and networking technologies.
“The biggest message we get from customers is: ‘We want more -- we want more from your portfolio,’” he said.
To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net.
Last Updated: November 23, 2009 17:46 EST |
