Sat, Feb 22, 2014 - Page 15 News List

Hewlett-Packard Q1 sales, profit top estimates

NOT CONVINCED:While earnings are improving, analysts said investors are seeking evidence that the company can deliver sustained revenue growth in the mobile era


Hewlett-Packard Co (HP) reported fiscal first-quarter sales and profit that topped analysts’ estimates as the PC maker won new orders for corporate machines and servers to run data centers.

Profit excluding certain costs in the period ending Jan. 31 was US$0.90 a share on revenue of US$28.2 billion, the Palo Alto, California-based company said in a statement on Thursday.

Analysts had on average forecast a profit of US$0.84 a share and revenue of US$27.2 billion, according to data compiled by Bloomberg.

HP chief executive Meg Whitman is trying to reshape the 75-year-old company, which is headed for a third straight annual sales decline as the PC market shrinks. HP’s sales of servers, the powerful machines that store and dish out data, may be benefiting as IBM Corp exits part of the market by selling a unit to Lenovo Group Ltd (聯想).

“That could result in a dynamic where HP could pick up more share,” said Amit Daryanani, an analyst at RBC Capital Markets.

He has the equivalent of a hold rating on the company’s stock.

“In servers, I think they’ve done slightly better, but nothing phenomenal,” he said.

“The restructuring program is very much on track, and customers and partners have a lot more confidence in HP than they did two-and-a-half-years ago,” Whitman said in a telephone interview.

First-quarter net income rose 16 percent to US$1.43 billion, or earnings per share of US$0.74, from US$1.23 billion, or US$0.63, a year earlier, the company said.

Revenue slipped less than 1 percent from US$28.4 billion the previous year.

While earnings are improving, investors are seeking further evidence that that the company can deliver sustained revenue growth before they buy more of the stock, said Bill Kreher, an analyst at Edward Jones & Co.

“These results justify the recent run-up,” said Kreher, who also rates the stock a hold. “While earnings are starting to turn, investors are looking for top-line improvements.”

Profit before certain costs in the second quarter, which ends in April, is expected to be US$0.85 to US$0.89 a share, the company said on Thursday. That compares with the average analyst estimate of US$0.89.

PC shipments fell for a seventh straight quarter in the last three months of last year, dropping 6.9 percent, as consumers continued to choose smartphones and tablets over laptops, according to researcher Gartner Inc.

HP had the No. 2 worldwide spot by unit sales, with 16.4 percent of the market — even as its shipments dropped 7.2 percent from the previous year.

First-quarter revenue in the personal systems unit, which includes PCs, rose 3.6 percent to US$8.53 billion, boosted by sales of business computers. Printing division sales dropped 2.2 percent to US$5.82 billion.

In the PC market, “the rate of decline is slowing,” Whitman said. “Commercial notebooks was a real bright spot.”

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