Hewlett-Packard Co’s (HP) profit swelled 25 percent in the latest quarter because of cost cutting and a stronger showing from its PC division.
Revenue was up in most of the technology company’s major divisions and HP raised its outlook for this year, citing “accelerating market momentum.”
The numbers show that technology spending by corporations is creaking back to life. HP is a bellwether because it is the world’s biggest maker of PCs and printers. HP’s latest results are also the first from a major technology company to include the full month of January.
HP said after the market closed on Wednesday that its net income was US$2.3 billion, or US$0.96 per share, for the three months ending Jan. 31. In the same period last year, it earned US$1.9 billion, or US$0.75 per share.
Excluding one-time items, HP said it would have earned US$1.10 per share. That beat the average estimate of US$1.06 per share, analysts surveyed by Thomson Reuters said.
Revenue jumped 8 percent to US$31.2 billion, exceeding analyst forecasts for US$30 billion.
HP’s services division stumbled, however. Revenue fell 1 percent even as the division grew more profitable, a difference likely explained by CEO Mark Hurd’s aggressive cost cuts to that business. Services represent HP’s latest challenge against rival IBM Corp and are a cornerstone of a major makeover for HP.
HP’s forecast for this year now calls for US$121.5 billion to US$122.5 billion in revenue, exceeding the US$120 billion analysts were expecting.
Net income is expected to be US$3.79 per share to US$3.86 per share, or US$4.37 per share to US$4.44 per share excluding charges. Analysts were expecting US$4.37 per share, excluding charges.
In the last quarter, HP’s PC division posted its first revenue increase in over a year, rising 20 percent to US$10.6 billion. Operating profit was up 22 percent. One reason could be an early lift from the rollout of new computers loaded with Microsoft Corp’s Windows 7 operating software. However, many corporations are still likely delaying their purchases of PCs with Windows 7.
Last month, Stacy Smith, chief financial officer of Intel Corp, said big companies still need time to test how the new software interacts with their internal applications. Intel supplies 80 percent of the microprocessors that power modern PCs and computer servers.
Already, new chips from Intel are helping to boost server sales, which slumped as corporate and government technology budgets shrank.
HP’s server division reported an 11 percent revenue jump on Wednesday.
IBM’s latest numbers included a 37 percent jump in revenue in the division that sells servers with Intel chips. HP and IBM are tied as the world’s No. 1 server sellers.
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