HP Profit Growth Driven by EDS, Laptop SalesBy Reuters - | Posted 2008-11-24 Email Print
HP's broad businesses, which include services, software, printers and ink supplies, has made it less vulnerable to the economic downturn than rival PC maker Dell. HP posted a 21 percent rise in quarterly sales of laptops, and doubling in revenue from services from the EDS acquisition earlier this year.
SAN FRANCISCO (Reuters) - Hewlett-Packard Co (HPQ.N: Quote, Profile, Research, Stock Buzz) posted a 21 percent rise in quarterly sales of notebook computers, and a near doubling in revenue from technology services thanks to its acquisition of Electronic Data Systems.
The gains more than offset modest drops in HP's printers and servers businesses, helping overall revenue rise 19 percent and net profit increase 4 percent in its fiscal fourth quarter ended October 31.
"We were impressed with the notebook revenue. They were easily able to outpace peers in a pretty tough environment," said Bill Kreher, an analyst at Edward Jones.
"They certainly benefited from the acquisition of EDS. It bears fruit in the results, which are still strong in my opinion. We have a buy rating."
HP's broad businesses, which include services, software, printers and ink supplies, has made it less vulnerable to the economic downturn than rival PC maker Dell Inc (DELL.O: Quote, Profile, Research, Stock Buzz). Dell also reported better-than-expected quarterly results, but mostly due to aggressive cost cuts.
HP's preliminary fourth-quarter report and fiscal 2009 outlook, issued on November 18, had blown past analysts' estimates at the time, sending its shares soaring. The company affirmed those figures on Monday, and gave additional details about its business divisions.
Chief Executive Mark Hurd said the No. 1 maker of personal computers is gaining market share in every segment, and is at or ahead of its integration plans for EDS.
He said HP's outlook was based on a cautious view of computer sales in what he called a challenging environment.
"We're guiding fairly conservatively" on PC sales and it will "have an effect across" the company, Hurd told reporters on a conference call.
Fiscal fourth-quarter net profit was $2.11 billion, or 84 cents per share, compared with $2.17 billion, or 81 cents per share, a year earlier. Profit per share excluding items, such as acquisition charges, was $1.03.
Fourth-quarter revenue rose 19 percent to $33.6 billion, or an increase of 16 percent when adjusted for currency effects.
EDS helped HP's services revenue jump 99 percent to $8.6 billion. Excluding EDS, services revenue rose just 10 percent.