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Hewlett-Packard reports improved profit

Hewlett-Packard Co. Tuesday reported a rise in quarterly profits that tracked its previous forecasts on strong sales of servers, PCs and notebooks.
/ Source: Reuters

Hewlett-Packard Co., the No. 2 computer maker, Tuesday posted a higher quarterly profit on strong demand for servers, personal and notebook computers and raised its sales forecast for the second half of the year.

Shares of the computer and printer maker, whose record-high quarterly sales topped even the most optimistic Wall Street forecasts, rose 3.4 percent in after-hours trade.

H-P said net income for the second quarter ended April 30 rose to $884 million, or 29 cents a share, from $659 million, or 22 cents a share, a year earlier.

Revenue rose 12 percent to a record $20.1 billion from $18.0 billion, helped by the weak U.S. dollar relative to the euro. Adjusted for currency effects, H-P said quarterly revenue increased 4 percent from a year ago.

Chief Executive Carly Fiorina said in a statement that revenue from PCs, computer services, software, services, and imaging and printing were all records for the second quarter.

“We surpassed $20 billion in quarterly revenue for   the first time in our history,” she added.

“They were able to do better than most people had expected,” said Marty Shagrin, an analyst at Victory Capital Management. “Generally, it was pretty much across the board.”

Excluding items, Palo Alto, California-based H-P said it had a profit of $1.03 billion, or 34 cents a share, up from $877 million, or 29 cents a share, a year earlier.

H-P’s results included a settlement amounting to 2 cents a share reflecting an agreed reimbursement to the Government of Canada.

Revenue growth tops Dell's ... again
Excluding items, analysts had forecast H-P to earn a profit of 34 cents a share, on average, within a range of 33 cents to 36 cents, on revenue of $19.3 billion. In February, H-P forecast earnings per share before items of about 34 cents, which was then in line with analyst expectations.

“The positive take-away from that is that to the extent there is upside at the sales line, that was able to drive earnings upside as well, which I think was somewhat of an issue in the past in that sales upside didn’t lead to earnings upside,” Shagrin said.

H-P said it expects revenue in the second half of the year of $39.7 billion to $40.7 billion and confirmed its expectation of second-half earnings per share before items of 74 cents.

For the second half of the year, analysts expect revenue of $39.8 billion and earnings per share before items of 74 cents, according to Reuters Research, a unit of Reuters Group Plc.

An H-P spokesman declined to comment on why HP declined to provide a third-quarter forecast.

Revenue from desktop PCs rose 14 percent from a year ago, while notebook revenue increased 26 percent. It was the third consecutive quarter, H-P said, that its year-over-year revenue growth exceeded that of its rival, Dell Inc.

H-P said that revenue from servers using Intel Corp.-compatible processors and either Microsoft Corp.’s Windows operating system or the Linux operating system climbed 32 percent from a year earlier.

H-P's stock is down about 14 percent year to date, amid a broad downturn in the value of technology stocks.