Growth in PCs, printers and imaging products during the second quarter helped Hewlett-Packard Co. (NYSE: HWP) easily surpass analyst estimates.
In fiscal second quarter results released after market close Monday, the technology giant posted net income of $918 million, or 88 cents a share. First Call's survey of 21 analysts predicted a profit of 80 cents for the quarter ended April 30.
Second quarter revenue rose slightly to $12.4 billion, from $12 billion a year earlier, when Hewlett-Packard earned $685 million. Especially strong were PC servers, mobile products and home PCs, and CD products. Among imaging devices, the company shipped more than 1 million scanners.
"This is the third consecutive quarter that we've exceeded street expectations," said Lewis E. Platt, who plans to step down as HP's chairman and CEO once the company's restructuring is completed. "We executed well and turned in an excellent bottom line, and we're encouraged by improved order growth of 10 percent. ... Clearly, our challenge is to convert order growth into stronger growth in revenue."
Orders in the measurement business grew 14 percent compared with the same period a year ago. But revenue declined 4 percent year-over-year, though it was up 13 percent sequentially. The chemical-analysis business saw 14 percent order growth and 6 percent revenue growth, with the company noting "very good" growth in the liquid chromatography and supplies businesses.
Semiconductor products business saw 12 percent order growth, while revenue was flat year-over-year.compared with last year's second quarter. Medical products orders rose 17 percent. Medical revenue increased 13 percent, largely thanks to cardiac ultrasound imaging products, patient-monitoring systems and automatic external defibrillators.
Monday's report shows that HP remains focused even as it gets ready to split, Platt said. "Challenges remain, however, including uncertainty about Y2K's impact on business and the transition under way in our enterprise storage business," he said. "In light of these challenges, we will remain sharply focused on profitable growth and on continuing to manage our own transformation seamlessly."
Shares of Hewlett-Packard gained 3 13/16 to 88 prior to the earnings news. Of 26 analysts polled by Zack's Investment Research, 11 maintain the equivalent of "moderate buy" ratings on HP, eight have the stock as a "strong buy", and seven rate it a "hold".>