HP Results Beat Wall St. Expectations
A week after ousting Chief Executive Carly Fiorina, Hewlett-Packard Co. said Wednesday that its fiscal first-quarter revenue rose 10% -- but that profit was little changed from a year earlier.
The results for the technology giant were ahead of Wall Street’s expectations and sent HP shares up nearly 4% in after-hours trading.
They also underscored the trouble that HP has had in eking out a profit in personal and corporate computer systems, one of the reasons behind the board’s decision to fire Fiorina.
Despite an improvement from last year, the company’s PC business managed an operating margin of 2%, compared with 15% for its printing and imaging business.
Strong holiday-season sales of personal computers and computer services for the quarter that ended Jan. 31 led HP to a profit of $943 million, or 32 cents a share, up 0.7% from $936 million, or 30 cents, a year earlier, interim CEO Robert Wayman told financial analysts in a conference call. Revenue was $21.5 billion, up from $19.5 billion.
Palo Alto-based HP’s operating earnings of 37 cents a share beat the consensus estimate of 34 cents by Wall Street analysts, who also had forecast revenue of $20.9 billion, according to Thomson First Call.
“This is a positive surprise following on the positive surprises at IBM, Intel, Microsoft, Dell and Apple,” said Mark Stahlman, an analyst in New York with the brokerage Caris & Co. “All the big companies have been quite consistent here in finishing out 2004.”
Wayman said he anticipated operating earnings of 35 cents to 37 cents a share in the current quarter, with revenue of $21.2 billion to $21.6 billion. Wall Street expects a profit of 36 cents a share on revenue of $21.1 billion, according to Thomson First Call.
HP shares, which lost 6 cents during the trading day Wednesday to close at $21.06 on the New York Stock Exchange, rose 66 cents in after-hours trading.
“The most important thing here is that with the finish of 2004 ... [and] with the January start, all indications are that momentum is strong,” Stahlman said.
HP Executive Vice President Vyomesh Joshi, who is in charge of printer and PC operations, said the long-struggling PC unit turned in a strong performance in the first quarter and was “the healthiest it has been in many, many years.”
PCs had operating earnings of $147 million on sales of $6.9 billion. That was a significant improvement over performance of recent years, Wayman said in a separate conference call with journalists.
Analysts and investors acknowledged the unit’s improvement at HP, which is the world’s second-largest PC maker, after Dell Inc.
“I was surprised by the profitability of PCs,” said Richard Chu, an analyst in Boston with S.G. Cowan Securities. “The absolute numbers aren’t that big, but it’s a lot more than I expected.”
HP lost some ground with consumer printers during the quarter.
“We are not satisfied with our consumer hardware performance in the first quarter, and we will take aggressive action to correct this in the coming quarter,” Joshi told analysts.
As usual, however, the printer division -- which includes scanners, cameras and ink -- accounted for most of the company’s earnings. Imaging and printing had an operating profit of $932 million -- 80% of total operating profit -- on $6.1 billion in sales.
