HP makes things personal again in Q3

Computers and currency do their thing

By Dan Goodin in San Francisco • Get more from this author

Posted in Financial News, 20th August 2008 05:37 GMT

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In a world of financial doom and gloom, sales of PCs are offering a glimmer of light. Don't believe us? Just look at Hewlett-Packard, which on Tuesday reported a third-quarter profit that beat Wall Street expectations and forecast healthy sales in the current period.

The chief driver for HP's success were sales of PCs, which rose 15 per cent. Notebook sales were particularly helpful, but HP also saw revenue from services jump 14 per cent and sales of printers and ink rise by 3.4 per cent.

HP also benefited from the weak US dollar, which generated highly favorable currency translations for international sales.

Third-quarter net income increased 14 per cent to $2.03bn, or 80 cents a share, from $1.78bn, or 66 cents, in the year-ago period. Profit after acquisition costs and other one-time expenses was 86 cents, three cents higher than the average analyst estimate. Sales rose 10 per cent to $28bn, though when adjusted for currency fluctuations, revenue increased only 5 per cent.

HP shares rose 2 per cent in after-hours trading, following the release of financial results.

HP isn't the only company enjoying growth in a challenging market. Last month, Apple broke revenue records thanks to bumper sales of Macs and iPhones. And in May, Dell posted strong results and for the first time said the majority of its revenue came from overseas customers.

Not everything in the HP report was hunky dory. Gross margins, the percentage of sales left after manufacturing costs, fell slightly from a year ago to 24.2 per cent. Higher costs of computer components and demand for cheaper machines helped contribute to the decline.

HP's earnings report is here. ®

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