Hewlett-Packard’s third-quarter profit beats Wall Street’s estimates, as the technology bellwether continued to cash in on brisk sales of personal computers.
HP’s net income for the third quarter was $1.78 billion or 66c per share, a 29% jump from the $1.38 billion in the year-ago period. Company’s revenues grew 16% to $25.4bn in the third fiscal quarter, led by a sharp increase in sales of personal computers.
Computer Company’s biggest source of revenue was its Personal Systems Group, which includes desktop and laptop computers. In the quarter, laptop sales grew 54% from the last year, whereas revenue within the segment grew to $8.89 billion from $6.92 billion year earlier. The strong results led HP’s shares 2% higher to $47.02 in after-hours trading.
HP posts buoyant profits amid the presence of its arch rival Dell Inc. Computer giant had lost its No. 1 position after facing problems in its operating units, while boardroom-spying scandal almost rattled it. However, new board and effective strategy pulled company back in the competitive arena and it successfully reclaimed No. 1 seller title.
The overwhelming results demonstrate the strength in all HP’s key businesses. Chief executive, Mark Hurd proudly said: ‘We are continuing to become a more efficient organization.’
However, analysts do not agree with the claim and warned for a potential slowdown in its Imaging and Printing Group, a closely watched division that includes the high-margin inkjet cartridges that have long been company’s cash cow. Analysts also predict that Eastman Kodak Co.’s foray this year into the inkjet-printer market with low-priced products could harm HP’s profitability. But HP’s third quarter results defy all speculations as Printing Group’s operating profit rose 11% to $981m from $884m.
HP also experienced 10% increase in sales of servers and storage equipment, an area where HP has struggled to gain momentum in the past; shows company’s better future.
Allured with the company’s performance, investors are applauding HP’s higher financial guidance. Company has also raised its expectations and anticipates profit between 80c-81c per share in the fourth quarter, whereas analysts are hoping 78c per share. Sales are expected to be in the range of $27-$27.2bn, also higher than the $26.46bn predicted by Wall Street analysts.
Via: CNN
