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Fat cat HP cashes in on PCs, servers and printers in Q1

Super Hurd laughs in the face of imploding economy

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Go ahead, Mark Hurd. Rip off those studious glasses and unbutton that blue Oxford shirt. We know there's a Superman costume lurking under the Clark Kent facade.

Mark "the Cutter" Hurd's HP may well have injected a fresh helping of optimism into the US financial markets. HP today reported a 13 per cent first quarter rise in revenue to $28.5bn. Beyond that, HP pleased very cautious investors by upping its full-year revenue forecast. HP now expects 2008 revenue to come in between $113.4bn and $114bn, which exceeds a previous forecast of $111.5bn.

Investors were happy enough with the Q1 results and rosy predictions to boost HP shares by more than five per cent in after-hours trading to $46.19 per share, at the time of this report.

HP's optimistic outlook runs counter to pessimism surrounding the US economy.

Hurd, during a conference call, shied from providing much color on the macroeconomic climate. Instead, he noted that HP continues to enjoy strong demand across its major product lines, while also having a number of cost cutting opportunities.

"Let me be clear," he said. "Our cost savings are significant and ongoing."

Okay then.

Hurd's only moment of relative reticence came when talking about the state of the PC market.

HP's PC sales grew 24 per cent during the quarter to $10.8bn. As has been the case of late, notebook sales led HP's charge, increasing 37 per cent year-over-year, while desktop sales rose 15 per cent.

According to Hurd, HP "saw a little bit more caution in the consumer segment" for US PC sales. In addition, HP doubts that it can keep up such impressive overall growth in the PC and notebook game.

But don't let that get you down.

During the first quarter, HP's net earnings increased 38 per cent year-over-year to $2.1bn. The hardware maker also pocketed $3.2bn in cash.

While PC sales carried HP during the quarter, all of its big businesses helped pad the bottom line.

The imaging and printing group saw revenue rise four per cent year-over-year to $7.3bn.

The enterprise hardware group boosted revenue nine per cent to $4.8bn. Sales of blade servers, x86-based systems and storage rose by double-digits. High-end server sales rose only 1 per cent, as a 37 per cent rise in Itanium-based system sales just offset losses from PA-RISC and Alpha gear.

HP's services arm reported an 11 per cent revenue increase to $4.4bn; the software group boosted revenue by 11 per cent as well to $666m and the financial services unit hiked revenue 17 per cent to $642m.

Overall, Hurd pounded away at his favorite refrains, saying HP will cut costs and cut costs and cut costs. No paper clip supplier or toilet contractor is safe under his regime. Do you all remember how much Carly loved her paper clips? Do you?

Incidentally, a Register shirt and mug combo package goes to the first reader who spots Hurd taking time away from cost cutting at this week's SAP Open tennis tournament in San Jose. ®

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