EDS, Notebook PCs, Drive HP Q4 Profit
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SAN FRANCISCO -- Hewlett-Packard (NYSE: HPQ) is gaining market share in every segment, and is at or ahead of its integration plans for computer services provider EDS, Chief Executive Mark Hurd said on Monday.
He made the comments after HP, the No. 1 maker of personal computers, posted quarterly results and fiscal 2009 forecasts that matched strong preliminary figures on Nov. 18. The preliminary report had topped Wall Street expectations and sent HP shares soaring 14 percent that day.
"We're guiding fairly conservatively" on PC sales and it will "have an effect across" the company, Hurd told reporters on a conference call, calling it a "challenging environment."
Fourth-quarter revenue rose 19 percent to $33.6 billion, or an increase of 16 percent when adjusted for currency effects.
The results were greatly helped by HP's acquisition of Electronic Data Systems (EDS), which helped services revenue jump 99 percent to $8.6 billion. Excluding EDS, HP's overall revenue grew just 5 percent.
HP notebook computer sales also did well in the quarter, rising 21 percent, compared with a 2 percent decline in desktop computers.
"We were impressed with the notebook revenue. They were easily able to outpace peers in a pretty tough environment," said Bill Kreher, an analyst at Edward Jones. "They certainly benefited from the acquisition of EDS. It bears fruit in the results, which are still strong in my opinion. We have a buy rating."
HP shares, which gained 3 percent on the New York Stock Exchange earlier on Monday, ticked 1 percent lower to $35.30 in after-hours trading. The stock had lost about one-third of its value from September to mid-November, before gaining about 20 percent since the strong preliminary results.
HP's broad businesses, which include services, software, computers, printers and ink, has made it less vulnerable to the economic downturn than companies focused mainly on PCs. Rival PC maker Dell Inc (DELL.O: Quote, Profile, Research, Stock Buzz) did better than expected in the October quarter, mostly due to an aggressive cost cuts.
It said software revenue rose 13 percent to $855 million, while revenue from its imaging and printing group fell 1 percent to $7.5 billion. Revenue from its enterprise storage and server division fell 1 percent to $5.1 billion.
The company stood by its forecast for first-quarter earnings of 93 to 95 cents per share excluding items, on revenue of $32 billion to $32.5 billion. It also confirmed its forecast for fiscal 2009 earnings of $3.88 to $4.03 per share excluding items, on revenue of $127.5 billion to $130 billion.