Hewlett-Packard’s Profit Increases 15%
Hewlett-Packard Co., the nation’s second-largest computer company, reported Tuesday that quarterly profit rose a better-than-expected 15% amid cost cuts and increased demand for some computers.
The Palo Alto-based company said it earned a record $912 million, or 87 cents per share, in the fiscal first quarter ended Jan. 31. That was up from a profit of $790 million, or 75 cents, in the year-ago quarter.
The profit was achieved despite slower-than-expected revenue growth, up 11% to $10.3 billion from $9.29 billion. The company cited a continued drive to hold down costs. But it said it needs further improvements in expenses, which rose 10% in the quarter, mostly due to higher research and development expenses.
The profit handily beat the 76 cents per share predicted by analysts surveyed by IBES International Inc. The highest estimate was 80 cents.
The results were announced after the close of financial markets. Hewlett shares rose $1.81 to close at $52.19 on the New York Stock Exchange, before the earnings were reported.
“The earnings were great,” said analyst John Jones of Salomon Bros., who had expected 80 cents a share. He said most of the boost came from higher gross profit margins and lower expenses in sales and administration.
Hewlett-Packard cited strong demand for its home computers and corporate servers, which help run computer networks. But revenue was mixed on workstations, which are powerful business machines, amid sagging demand for those based on the Unix operating system.
Results were also mixed from computer printers, whose prices have been weakened by competition.
Hewlett-Packard’s computer support and services business posted better results.
“This year is off to a solid start,” said Lewis E. Platt, HP’s chairman and chief executive.
But he warned that “economic conditions in some major markets are sluggish, and we expect an extremely challenging competitive environment in the months ahead.”
Hewlett-Packard said it was disappointed by a 9% growth in new orders for its products. The orders were hurt by a comparison with unusually strong results in the year-ago quarter and the unfavorable impact of currency exchange rates, particularly in Germany and Japan.
