Tech Industry

HP beats 1Q estimates

Hewlett-Packard (NYSE: HWP) gained in after-hours trading Wednesday after the company reported first quarter results ahead of analyst forecasts.

After market close Wednesday, the technology hardware and services company reported fiscal first quarter net income of $794 million, or 80 cents, from continuing operations excluding one-time events. First Call's survey of 23 analysts predicted a earnings per share of 78 cents for the quarter ended Jan. 31.

Including charges related to the spinoff of Agilent Technologies (NYSE: A) and stock option compensation, HP earned 77 cents per share.

Shares of HP traded as high as 132 in afte-rhours activity following the earnings report. The stock moved up 4 5/8 to 129 3/8 in Wednesday's regular trading. HP's share price has risen 93 percent since late October.

First quarter revenue rose to $11.67 billion, a 14 percent gain from $10.24 billion in the year ago period. Computing systems revenue increased to 15 percent to $5.13 billion, imaging and printing sales gained 13 percent to $5.14 billion and services rose 14 percent to $1.62 billion.

"We delivered excellent results overall, particularly in terms of revenue growth," said Carly Fiorina, president and CEO. "This progress reaffirms the strategic choices we're making, and we're pleased with the market reaction to our accelerating pace."

Cost of goods sold moved up to 71.5 percent of revenue, up from 71.3 percent in the fourth quarter and 69.1 percent in the first quarter of fiscal 1999. The company blamed the profit margin decrease on higher costs for memory chips, a stronger Japanese Yen and higher sales of low-end products.

"We're not satisfied with where operating margins are," CFO Robert P. Wayman told analysts during a conference call.

Domestic revenue increased to $5 billion, a 12 percent gain year-over-year. Non-U.S. business picked up 16 percent and generated 57 percent of HP's overall first quarter revenue. Europe saw $4.3 billion in revenue, up 7 percent year-over-year, while Asia Pacific revenue rose 46 percent to $1.6 billion.

Wayman reiterated HP's earlier goals of boosting revenue earnings by 12 to 15 percent this year. "Given the strong results in the first quarter, we are certainly hoping to come in closer to the high end of this range," he said Wednesday.

In the first quarter, units shipped doubled for home PCs, although revenue fell slightly because of lower prices. First quarter shipments of notebook computers more than tripled from a year ago. The company cited International Data Corp. statistics that show HP gained one percentage point of market share.

HP reported strong growth for low-end and high-end servers. Midrange Unix systems saw flat growth. "We're seeing excellent growth in the Internet space," Fiorina said. "While we clearly have work to do in the midrange, we're seeing good momentum."

Enterprise storage revenue grew sequentially. Desktop storage revenue fell despite increased market share, the company said.

Printing supplies led the imaging and printing segment's revenue increase, HP said. Revenue from printer consumables gained more than 30 percent, Wayman said.

Services revenue was especially strong growth in mission-critical, networking, and Windows NT business.>