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Hewlett-Packard Beats on Laptop Sales

Posted: 2007-08-17 06:46:29

SAN JOSE, Calif. (Aug. 17) - Hewlett-Packard Co. continues to cash in on ravenous demand for personal computers and lucrative printer ink, with third-quarter sales and profit that easily beat Wall Street's expectations.

But while the earnings report Thursday helped convince investors that HP can still expand rapidly despite its mammoth size - the company is expected to crack $100 billion in sales this year for the first time - the reaction on Wall Street was muted.

Shares rose only fractionally on a boosted financial forecast, inching up 40 cents to $46.45 in after-hours trading. Before the results were released, the stock had closed down 10 cents to $46.05.

Analysts said HP has become so reliable under Chief Executive Mark Hurd and so well-positioned to profit from booming global PC sales that even an upside earnings surprise isn't enough to move the stock dramatically. HP shares are already up 11 percent so far this year, hitting a 52-week high last week of nearly $50.

"It's a very strong quarter but not much of a surprise. A lot of this was already baked into the stock price," said Anders Bylund, analyst with The Motley Fool.

HP's net profit for the quarter ended July 31 was $1.78 billion, or 66 cents per share, a 29 percent jump from the $1.38 billion, or 48 cents per share in the year-ago period. Excluding one-time charges, the Palo Alto-based company earned 71 cents per share, 5 cents higher than the average estimate of analysts polled by Thomson Financial.

The technology bellwether's sales for the period were $25.38 billion, a 16 percent increase from the $21.89 billion recorded a year ago. Revenues were more than $1 billion higher than the $24.09 billion in sales that analysts had been predicting.

The biggest sales jump came within the company's Personal Systems Group, which includes desktop and laptop computers and is HP's biggest source of revenue. Bolstered by laptop sales that grew 54 percent over last year, revenue within the segment grew from $6.92 billion last year to $8.89 billion this year.

Last fall, while HP's boardroom spying scandal was publicly unraveling, the company reclaimed the title of the No. 1 seller of PCs worldwide from struggling rival Dell Inc. by exploiting its widespread presence in retail stores and consumers' growing preference for laptop computers. HP commanded about 19 percent of the worldwide PC market in the second quarter compared with Dell's 16 percent, according to market research firm IDC, citing the most recent data available.

Analysts have been concerned about a potential slowdown in HP's Imaging and Printing Group, a closely watched division that includes the high-margin inkjet cartridges that have been long been the company's cash cow. They have worried that Eastman Kodak Co.'s foray this year into the inkjet-printer market with lower-priced products could harm HP's profitability.

But HP delivered a strong showing in the third quarter. Operating profit for the division rose 11 percent from $884 million to $981 million. The unit provided HP with nearly 40 percent of the company's total operating profit.

HP said it expects profit in the fourth quarter of 80 cents to 81 cents per share, excluding one-time charges, which is a few pennies higher than the 78 cents analysts were expecting. Sales are expected to be in the range of $27 billion to $27.2 billion, also higher than the $26.46 billion predicted by Wall Street analysts.

For the year, HP expects sales of $103 billion to $103.2 billion.

Copyright 2008 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. All active hyperlinks have been inserted by AOL.

2007-08-16 16:36:33

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13 comments

jimbobd421 08:18:49 PM Aug 18 2007

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i have a Dell PC desk top and its ok. i'm going with HP next. My mother just got her a HP laptop and loves it. I'm fixing to get me a HP laptop and may go ahead and get a HP desktop. Dell Techs are no use to me. I have never found one i can understand. Thank god i have a computor tech that works on computors down the road from me.

violetsp9 12:46:55 AM Aug 17 2007

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I JUST HATD TRYING TO RESOLVE A PROBLEM WITH A PERSON IN INDIA OR PAKISTAN OR SOUTHAMERICA WHO CANNOT SPEak english it is no help at all AMERICANS NEED JOBS HIRE AMERICANS DAMMIT IM SICK OF THIS OUTSOURCING INCOMPETENCY.

mistcinda 10:45:11 PM Aug 16 2007

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I agree with secondself about tech. support. way to hard to understand, and dell has the same problem.I bought H P because i was told by the salesperson their tech support was in the states. Boy was he wrong !

RN Enterprises03 10:19:02 PM Aug 16 2007

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To VanillaM400......your IT guy is an idiot.

Dscs360 09:58:11 PM Aug 16 2007

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I would highly recommend HP due to the fact that I own so many. The laptops have everything that you could ask for, and then some, i.e. remote control, SD other card slots, Altec Lansing immaculate speaker system, etc... Well worth it.

Housemusictrax 09:51:47 PM Aug 16 2007

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dell is a big ripoff and bait and switch, I just bought a new hp pc, no more dell

ShdwwtchrDA 09:09:00 PM Aug 16 2007

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I bought a HP Pavilion zv6000 laptop in Feb. 2006 and have been pleased with it. Yeah, there are a few things on it which will get fixed under warranty, but I have really enjoyed the system! Two weeks ago I bought a Compaq F500 laptop, with Dual core Athlons 64 and it does great!! My son likes it better then the old HP!! I am pretty satisfied with them. HP is doing a pretty good job putting out good products!

TwaltGrace 09:00:21 PM Aug 16 2007

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Today I can safely say that HP is one of the most popular and more reliable computers on the market. But as with all computers it seems there are those few models with defects from the maker, be it a Dell or HP. Most computers today are good, but we all have a preference because of the experiences we have had. My preference is HP I have had my computer for a few years and its reliable, so I go with the old addage, if it aint broke don't fix it.

Secondself7 08:08:48 PM Aug 16 2007

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HP's tech support seems to consist of one tech and a bunch of wanabee's who can barely speek english. A person can expect to spend a lot of time waiting to talk to a wanabee. Then waiting for tech to explain to the wanabee , or waiting for the wanabee to look up a problem in a manual then straining your ears to understand what you are being told what to do. These are nice enough people. But talk about time consuming. After 9 months of this the laptop was sent in, 4 problems were fixed. Now I hold my breath hoping nothing else goes wrong. I hear that dell support is similar as far as dealing with techs from India.

Jmbaker8001 06:49:41 PM Aug 16 2007

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You guys must not know computers or laptops very well. I've bought 10 sets between computers and laptops from Dell, and they're the best things I have ever bought. I will never buy anything else as long as Dell is around.

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13 comments