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 user 2006-11-21 at 12:06:00 pm Views: 49
  • #17044

    HP Beats Q4 Forecasts As Profit Surges
    turned in another quarter of revenue and earnings growth on strong
    sales of PCs and printers, its core product lines.

    technology giant reported a 33% rise in fiscal fourth quarter earnings
    to 68 cents a share, excluding items, beating views by 4 cents. Sales
    rose 7% to $24.6 billion, edging past most forecasts and exceeding the
    5% to 6% range for the first time in seven quarters.”The PC numbers and
    continued strength in the printing business certainly bode well for the
    company’s future,” said Bill Fearnley of FTN Midwest.For the current
    quarter, HP sees earnings of 60 to 62 cents per share, just over
    views.HP also said the Securities and Exchange Commission has opened a
    formal probe into a spying scandal that has already led to the
    indictments of HP’s former chairwoman, a former executive and private
    detectives hired to root out the source of board leaks to the press.The
    detectives snooped on several executives, board members and news
    reporters, and unearthed their phone records, possibly illegally.Even
    amid the spying scandal, HP’s story under Chief Executive Mark Hurd
    continues to be one of steady sales growth amid cost cutting to boost
    profits.The company has nearly completed plans to cut 15,200 jobs and
    is consolidating data centers, call centers and real estate holdings.HP
    has also boosted efforts to work with resellers to improve sales. It’s
    providing more training and marketing support, and offering incentives
    to sell HP-branded printers and other accessories.”We’re seeing HP work
    with resellers and engage customers more frequently and effectively to
    better defend their installed base of equipment,” said Daniel Renouard,
    an analyst with Robert Baird.Personal computer sales rose 10% over last
    year to $7.8 billion as consumers and businesses snapped up notebooks.
    Sales of desktop PCs changed little.HP leapfrogged Dell (DELL) to
    become the world’s top PC seller in the third quarter of 2006,
    according to market share figures released last month by research firms
    IDC and Gartner.Printer sales rose 7% to $7.3 billion and operating
    profits jumped 23%, helped by sales of high-margin color laser and
    multifunction printers.Servers and storage sales grew 4% to $4.7
    billion as blade server sales offset tepid sales of networked storage.
    Operating profit surged 24%.Services revenue rose 5% to $4.1 billion,
    led by a 16% jump in managed services.Software sales grew 14% to $349

    HP’s growth prospects are mixed.
    profits, the largest driver of IT spending, remain healthy.But many
    companies are turning to virtualization technology to tap unused
    computing resources rather than buy new equipment. That could dent
    hardware sales, said Raymond James analyst Brian Alexander.Holiday
    sales of PCs and printers will be critical for HP given its reliance on
    consumers.Fearnley said HP’s “PC sales momentum continues to be very
    strong because they have been aggressive on pricing.”But consumers may
    delay purchases until Microsoft’s January release of its Vista
    operating system.HP also faces the threat of resurgent price
    competition from Dell.