HP earnings rise 25 percent to $2.3 billion
The computer and printer maker posts strong results for the first quarter of 2010. CEO is upbeat about the quarter and the company's prospects for the rest of the year.
Hewlett-Packard has beaten expectations for its first fiscal quarter of 2010.
The company reported on Wednesday net revenue of $31.2 billion and earnings of $2.32 billion, or 96 cents per share. That's an 8 percent boost from revenue of $28.8 billion and a 25 percent boost from earnings of $1.86 billion, or 75 cents per share, in.
Wall Street was expecting earnings of $1.06 per share and revenue of $30.01 billion. Analysts who track HP had been anticipating strong gains in the PC and server businesses, which the company delivered. PC shipments grew 26 percent over the past year and HP maintained its lead as the world's largest PC vendor. Server revenue increased 11 percent to $4.4 billion.
In a statement released prior to the company's earnings call with analysts Wednesday afternoon, CEO Mark Hurd was upbeat about the quarter and the company's prospects for the rest of the year.
"HP is well-positioned to outperform the market," he said. "The strength of our portfolio, leaner cost structure and accelerating market momentum give us the confidence to raise our full-year outlook."
On a conference call with analysts, CFO Cathie Lesjak said that based on the strong results so far this year, HP is now expecting better results for the full year. By the end of 2010, the company expects to have gained revenue of $121.50 billion to $122.50 billion, up from previous estimates of $118.0 billion to $119.0 billion. It's also anticipating earnings per share of $4.37 to $4.44 for the year. HP is considered a bellwether and the company's decision to raise its outlook bodes well for the industry.
The particular strong point for HP this quarter was printers, a business that has long been the company's largest source of revenue, but that had been hurting of late. The economy combined with consumers' tendency to print less and share pictures and document via e-mail and the Web was taking its toll on the division. But Hurd said that HP made fixing the printer unit a priority last year, and the results for the first quarter of 2010 showed improvement.
Consumer printer shipments grew 18 percent, while commercial printer shipments increased 11 percent compared to a year ago. Hurd said the shipments of the company's relatively new wireless printers doubled, and ink products tripled.
The PC market, which began to pick up at the end of 2009, should also continue to improve, Hurd said.
"We saw a pretty strong consumer demand. We expect that to continue in the first half of the year," he said. "We do expect a corporate refresh in the back half of the year."
Besides ink and printers and PCs, Hurd says his company will focus efforts on growing its sales staff.
"HP's salesforce is 50 percent larger than when I joined the company and we want to increase that number," he said Wednesday.
He said that the company is currently hiring for its direct sales and channel partners in growing international markets.
HP stock rose 48 cents to $50.57 in after-hours trading.
This post was updated with comments from Mark Hurd and Cathie Lesjak from the analyst call at 2:50 p.m. PT.
Updated 3/7/10: HP was forced to adjust its earnings due to an unexpected payout in a legal skirmish regarding EDS. The company revised its first-quarter earnings to $2.25 billion, and 93 cents per share, from the previously reported $2.32 billion, or 96 cents per share.