Hewlett-Packard Co (HP) tripled the size of its share repurchase program to US$12 billion as China sales and better profit margins on its services boosted quarterly earnings.
The fiscal fourth-quarter results released on Monday were in line with preliminary figures that HP gave two weeks ago, which had topped Wall Street’s estimates at the time. Shares of HP fell slightly in after-hours trading.
“The economy remains challenging, but we do see encouraging signs of recovery in certain markets,” chief executive Mark Hurd said on a conference call with analysts.
Hurd cautioned that Europe remains weak, if stable, and it was not clear when a recovery will take hold in the region.
The company’s diversification, recurring revenue and cost controls have provided it with a solid cushion during the downturn.
HP bought EDS last year to become the No. 2 provider of IT services, behind IBM. HP said it has now cut 19,000 jobs as it continues to integrate the company.
HP’s services revenue rose 8 percent, and the company said signings were “strong,” positioning it well for next year.
PC unit sales rose 8 percent, although revenue fell 12 percent as prices across the industry continue to fall.
HP, the world’s No. 1 PC maker, continues to engage Acer Inc (宏碁) in a price war, analysts say, particularly on consumer laptops. HP said it made big gains in the enterprise PC business in the US and PC revenue in China jumped 40 percent.
Earlier this month HP announced a US$3 billion deal to acquire 3Com Corp, as it moved to take on network giant Cisco Systems Inc. As competition in the corporate data center heats up and industry consolidation continues, analysts expect HP to remain aggressive in mergers and acquisitions.
“The No. 1 thing we get back from customers is they’d like us to do more, they’d like us to have a broader portfolio with more capabilities,” Hurd said.
HP raised its stock repurchase plan by US$8 billion, the company said. About US$4 billion remained of an US$8 billion share buyback program approved in September last year.
Chief financial officer Cathie Lesjak said the authorization was part of its normal strategy.
HP reported a net profit of US$2.4 billion, or US$0.99 a share, in its fourth quarter, up from US$2.1 billion, or US$0.84 a share, in the year-ago period.
Excluding items, HP earned US$1.14 a share. Revenue fell 8 percent to US$30.8 billion.
As it forecast earlier this month, HP expects fiscal 2010 earnings, excluding items, of US$4.25 to US$4.35 a share on revenue of US$118 billion to US$119 billion.
Shares of Palo Alto, California-based HP closed at US$51.02, up 1.96 percent, on the New York Stock Exchange and fell to US$50.71 after hours.
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