HP posts strong sales across board
Many of its competitors are seeing single or worse, but Hewlett-Packard Co.’s revenue growth is double-digit.
HP on Wednesday reported fiscal second-quarter revenue that was nearly $3 billion more than in the same quarter last year, an increase of 13.2%. Net income was $1.78 billion, or 65 cents a share, down 7% from $1.9 billion, or 66 cents, because of one-time expenses in the latest quarter and a tax gain a year earlier.
Many other computer companies’ revenues grew less than 10% -- or were in negative territory.
HP, based in Palo Alto, credited strong growth across the board for $25.53 billion in revenue. Sales of notebook computers were up 45%, and desktop sales rose 9%.
“We had a strong second quarter across the portfolio,” Chairman and Chief Executive Mark Hurd said.
With 65% of sales outside the U.S., HP benefited from a growing international market. Revenue in Asia was up 16%.
Hurd said HP was on track for annual revenue of $100 billion, a number that would be a first for a technology company.
In after-hours trading, HP’s stock was up nearly 1% to $45.62. In regular trading, the stock closed at $45.21, up 1%.
HP has made strides through cost cutting, analysts said. It has about 156,000 employees today and has shed about 15,000 since Hurd took over in 2005.
“They’ve been able to reduce costs; that’s the main driver, as well as expanding their focus into other businesses like software,” said Wendy Abramowitz, a senior analyst with Argus Research Corp. in New York.
In the company’s second quarter, which ended April 30, HP saw a 58% increase in software sales.
“I wouldn’t say demand is better than expected,” said Shaw Wu, an analyst with American Technology Research Inc. in San Francisco. “We call it a leaner and stronger HP.”
In 2004, HP’s quarterly expenses were about 18% of revenue, Wu said. Today, it is 15.5%. “If your costs are lower, it allows you to price more aggressively and it gives you more room to spend on areas that matter, like paying more incentives to [the] sales force,” Wu said.
In the last year, HP has gained market share from Dell Inc., overtaking its Texas-based rival as the leader in personal computer sales worldwide.
According to market research firm IDC, HP’s global market for computers was 19.1% in the first quarter of 2007, compared with Dell’s 15.2%.
In the U.S., Dell is the leader, with 26.8% of market share -- but that’s down from 32.4% in the same quarter last year.
HP, by comparison, went from 20% of U.S. market share in the first quarter of 2006 to 24.2% in the first quarter of this year.
Hurd wouldn’t comment on speculation that Dell might move away from its online model and sell in brick-and-mortar retail stores. “They need to do what is best for their business,” Hurd said. “Market share is a result, not the thing we’re after.”
For Wall Street, HP’s numbers didn’t come as a surprise. On May 7, an HP employee inadvertently sent an e-mail to someone outside the company, revealing relevant financial information. Early the next day, HP revised its forecast for the quarter, saying sales would be huge. The stock jumped more than 2%.
“We wish it hadn’t happened,” Hurd said. “While it’s unfortunate, it was a pretty good statement about the company to get feedback from an employee and take steps.”
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