Demand for laptop computers spurred sales and elevated profit at Hewlett-Packard Co. during the latest quarter.
HP said Monday that sales of notebook computers grew nearly 50% compared to a year earlier. That helped push net income up 26%, beating Wall Street expectations. And HP was bullish about the future, predicting continued gains in sales.
“There’s a tremendous opportunity out there and we like how we’re positioned,” said Chief Executive Mark Hurd in a conference call.
The Palo Alto-based company said overall business grew fastest in emerging economies, such as Brazil, India, Russia and China. In computer sales alone, China, HP’s third-largest market, saw sales double. HP sells products in 400 Chinese cities and plans to expand, Hurd said.
Looking ahead, Hurd said the company didn’t see any of the softness in the U.S. market that other technology leaders have cited, particularly in financial services, and predicted HP’s sales would continue to climb.
“One reason we are optimistic is the explosion of digital content,” Hurd said. “HP plays a role if the information is managed, processed and stored. Content is good for our business.”
HP’s net income in its fiscal fourth quarter ended Oct. 31 was $2.2 billion, or 81 cents a share, up from $1.7 billion, or 60 cents a year earlier. Revenue was $28.3 billion, up 15% from $24.6 billion. Analysts surveyed by Thomson Financial had expected revenue of $27.4 billion and profit of 82 cents.
Excluding some items, HP reported earnings per share of 86 cents, beating the expectations of Wall Street analysts by 4 cents.
Shares of HP fell $1.26 to $49.49 during regular trading Monday, but rose 1.74% after hours following the release of the earnings report.
Worldwide, HP shipped 33% more computers in the latest quarter, capturing 19.6% of global market share, according to the research firm IDC.
HP rival Dell Inc., which captured nearly 17% of the market in the quarter last year, had 15% this year. HP moved ahead of Dell globally for the first time in October 2006 and has steadily gained ground since.
Dell is still the No. 1 seller of computers in the U.S., with a 28% share of the market compared to HP’s 24%. The gap between the two has been narrowing for about two years.
One blemish in HP’s earnings report was that the printer division’s revenue grew just 4% to $7.6 billion. Industry analysts said the division suffered by comparison to its success last year, when sales skyrocketed in the firm’s fiscal fourth quarter by 17%.
HP said it was in the process of rethinking its printing business, picking high-growth businesses and getting out of other areas. It recently announced that after the holidays it would no longer manufacture cameras but would find a manufacturing partner that would license cameras under the HP brand.
This month, comments from Cisco Systems Inc. Chief Executive John Chambers about weakened demand for technology from U.S. financial services firms led to a sell-off of technology stocks.
Hurd offered a different view, saying HP expected between 9% to 10% growth in the next quarter, the ninth consecutive quarter for which the company has increased its guidance.
The company’s results and optimistic outlook allayed some fears that corporations were cutting back on technology spending.
HP, the largest technology company by revenue, “came out with strong results and provided healthy outlook going forward,” said Brent Bracelin, a research analyst with Pacific Crest Securities, a technology investment bank. “Based on HP’s quarter and its guidance, things are still healthy out there.”