Hewlett-Packard Reports 10% Jump in Computer Sales (Update2)
By Connie Guglielmo
Nov. 24 (Bloomberg) -- Hewlett-Packard Co., the world’s biggest personal-computer maker, reported a 10 percent increase in PC sales last quarter, beating some estimates, as demand for laptops held up in the face of a slowing economy.
PC revenue climbed to $11.2 billion, the Palo Alto, California-based company said today in a statement. Toni Sacconaghi, an analyst with Sanford C. Bernstein & Co. in New York, projected that PC sales would rise to $11 billion.
Hewlett-Packard spurred sales by redesigning its best- selling notebooks and going after budget-minded shoppers with a new line of mini-portables priced below $400. The company relied on its network of more than 80,000 retailers to maintain its two- year lead over Dell Inc. in the worldwide PC market.
“The PC business is actually better than I’d expected,” said Chuck Jones, an analyst in San Francisco with Atlantic Trust Private Wealth Management, which controls $16 billion in assets, including Hewlett-Packard shares. “That’s a good number, especially compared to Dell.”
Hewlett-Packard was little changed in late trading after rising 3.1 percent to $35.70 on the New York Stock Exchange. The shares have lost 29 percent this year.
Fourth-quarter net income dropped 2.4 percent to $2.11 billion, or 84 cents a share, from $2.16 billion, or 81 cents, a year earlier, the company said. Excluding some costs, profit was $1.03 a share. Today’s results, which cover the quarter ended Oct. 31, followed preliminary numbers released last week.
Market Lead
“It will be a challenging environment and we’re planning on such,” Chief Executive Officer Mark Hurd said today on a conference call with reporters. “We can only control the things we can control, which is our cost structure and the competitiveness of our products.”
The company accounted for 18 percent of PC shipments in the most recent quarter, according to Gartner Inc. Dell had 14 percent, the Stamford, Connecticut-based research firm said.
PC shipments represent almost a third of revenue at Hewlett- Packard and about 17 percent of operating profit. Sales of notebooks rose 21 percent, while revenue from desktop systems dropped 2 percent. Profit from the PC group rose 4.6 percent to $616 million. The margin, or the percentage of sales left after deducting product costs, narrowed to 5.5 percent, from 5.8 percent a year earlier.
Printer Sales
Hewlett-Packard, which also leads the market for printers, said sales in that business dropped less than 1 percent to $7.5 billion. The unit’s profit rose to $1.16 billion, from $1.1 billion a year earlier. Sales of printing supplies grew 9 percent.
Since taking over in 2005, Hurd has eliminated jobs, closed offices and merged data centers to lift profit even as he expands through acquisitions. The company last week forecast a rise in 2009 profit to as much as $4.03 a share, higher than the $3.89 anticipated by analysts in a Bloomberg survey. Investors took that as a sign the company is prepared to squeeze more out of sales as customers reduce spending amid a worldwide recession.
Sales, boosted by the acquisition of Electronic Data Systems Corp. in August, rose 19 percent to $33.6 billion. Without EDS, sales gained 5 percent, the company said last week.
Profit this quarter will be 93 cents to 95 cents a share on first-quarter sales of $32 billion to $32.5 billion, the company said. For the fiscal year ending in October 2009, Hewlett-Packard expects sales of $127.5 billion to $130 billion.
Safe Forecast?
“I don’t think the company would give out a number they would miss,” said Bill Kreher, an analyst at Edward Jones in St. Louis. He advises buying the shares, which he doesn’t own personally. “Mark Hurd is known for giving conservative forecasts, and he usually beats his numbers.”
Corporate technology spending will grow at less than half the pace initially predicted next year as financial clients pare orders, research firm IDC said this month.
Global technology spending probably will rise 2.6 percent in 2009, down from an earlier estimate of 5.9 percent, according to Framingham, Massachusetts-based IDC. Growth in the U.S. will slow to 0.9 percent, the research firm estimated.
Hurd spent $13.2 billion on EDS to expand Hewlett-Packard’s services business. In September, he said he would cut 24,600 jobs, or 7.5 percent of the combined workforce, to save $1.8 billion a year. It was his biggest workforce reduction.
Services revenue almost doubled to $8.64 billion, boosted by the EDS acquisition.
To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo@bloomberg.net
Last Updated: November 24, 2008 17:06 EST |
