updated 11/20/2007 2:09:11 PM ET 2007-11-20T19:09:11

Hewlett-Packard Co., which took the title of world’s biggest PC seller a year ago from slumping rival Dell Inc., is warning investors that it does not expect its PC business to continue expanding as quickly as it has been.

“The numbers we’ve delivered are huge. It’s not prudent to build a business model on that,” Chief Executive Mark Hurd said in an interview Monday. “We’re not building our models on the kind of growth we’ve seen in the past.”

Sales of laptop and desktop computers have fueled much of the Palo Alto-based company’s growth over the past year, jumping 26 percent to $33.5 billion and accounting for nearly a third of HP’s $104.3 billion in revenue in 2007.

Still, Hurd said Monday that the company isn’t forecasting the same kind of rapid growth for its PC business, though it expects to continue taking market share from other makers. The company has historically given similarly conservative financial guidance.

As the world’s largest technology company, HP’s results are closely watched for signs about the health of technology spending.

Investors were interested this quarter in whether HP was hurt by the continuing mortgage crisis that has saddled banks with billions of dollars in losses. But Hurd said HP derives only a small slice of its business from sales to the financial services sector. He didn’t see any “material weakness” in that segment during the latest quarter, he said.

“We’re actually trying to get more exposed to financial services— we see that as a big opportunity for us,” Hurd said on a conference call with analysts.

HP reported fourth-quarter sales and profit Monday that easily beat Wall Street’s forecasts.

A brightened financial outlook and the board’s authorization of $8 billion more for stock buybacks — a sign the company believes its shares are undervalued — helped lift HP shares 86 cents to $50.30 in after-hours trading. They fell $1.31 to $49.44 during the regular session Monday, before the results were released.

HP’s net income leaped 28 percent in the three months ended Oct. 31, to $2.16 billion, or 81 cents per share, from $1.69 billion, or 60 cents per share, in the same period a year earlier.

Excluding one-time charges, HP’s profit was 86 cents per share, 4 cents higher than the average estimate of analysts polled by Thomson Financial.

Sales jumped 15 percent to $28.29 billion, nearly $1 billion more than the $27.4 billion Wall Street was expecting.

Aided by falling prices for components such as memory chips, strong PC sales were behind much of that growth, including a 49 percent rise in laptop sales to $5.16 billion and a 15 percent increase in desktop computer sales to $4.21 billion.

HP currently commands about 20 percent of the worldwide PC market, compared with Dell’s roughly 15 percent, according to the latest data from market researcher IDC.

But HP’s most profitable business is printer ink. The company derived 42 percent of its $2.63 billion total operating profit in the latest quarter from its Imaging and Printing Group, nearly twice the amount contributed by the Personal Systems Group, which includes PCs.

For the full fiscal year 2007, HP rang up $104.3 billion in sales, a 14 percent improvement over last year and the first time HP has cracked $100 billion in annual sales. Net income for the year was $7.26 billion, or $2.68 per share.

Investors were pleased with a higher financial forecast.

HP expects profits — excluding one-time charges — of 80 cents per share in the first quarter, 3 cents higher than Wall Street’s forecasts. And it predicts sales between $27.4 billion and $27.5 billion, also higher than the $27 billion analysts were expecting.

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