Hewlett-Packard Co on Thursday reported quarterly profit that rose 30 percent as the computer and printer maker grew revenues twice as fast as rival Dell Inc in desktop and notebook PCs for the second consecutive quarter.
The strong results were seen as a further vindication of HP's 2002 acquisition of Compaq, especially given its profit on PCs and corporate servers, two areas that critics had expected would remain areas of competitive weakness in the combined company.
HP also offered a forecast for the current quarter that was in line with current Wall Street expectations.
"I would say on balance the merger has worked, and certainly they also did what they said they were going to do in terms of taking costs out, and now it's a question of growing their business, and I think they're doing it," said Rose Papp, research director at Roy Papp and Associates, which owns HP shares.
HP, based in Palo Alto, California, said net income rose to $936 million, or 30 cents a share, in the fiscal first quarter ended January 31, from $721 million, or 24 cents per share, a year earlier.
Revenue rose 9 percent to $19.5 billion from $17.9 billion, helped by currency effects. Adjusted for currency effects, total revenue rose 1 percent from a year earlier.
"In what is a seasonally down quarter for our company, we met our commitments and delivered a solid performance," said Chairman and Chief Executive Carly Fiorina on a conference call.
Still, there were areas of concern, analysts said, citing slower growth in HP's profit engine, its imaging and printing group. Sales of printer supplies, such as ink cartridges, which fuel profits at HP's printer business, rose 8 percent, a disappointing figure.
"There were certainly bright spots but questions were raised," said Richard Chu, an analyst at SG Cowen. Whether (the supplies growth) was only a reflection of channel inventory reduction or some slowing in adoption rates, we have no idea at this stage. That number was disappointing.
Operating profit in HP's enterprise services business, which sells servers and data storage gear and includes software, was $108 million, compared to a year-earlier operating loss of $82 million, HP said. Revenue for that group rose to $3.92 billion from $3.74 billion.
HP's PC business, under fire from some for its slim profitability in recent quarters, saw revenue of $6.19 billion, up 20 percent from a year earlier, and its operating profit improved to $62 million, compared with $33 million in the year-ago quarter.
Excluding items, HP said it had a profit of $1.08 billion, or 35 cents per share, compared with a year-earlier profit before items of $877 million, or 29 cents per share.
Analysts had forecast HP, which earlier this month confirmed its prior guidance for the first quarter, to post a profit of 35 cents a share, on average, within a range of 34 cents to 36 cents, on revenue of $19.4 billion.
For the current second quarter, HP said it expects earnings per share before items of about 34 cents on revenue of $19.2 billion to $19.6 billion.
Analysts currently expect HP to post a second-quarter profit of 34 cents per share, on average, within a range of 33 cents to 37 cents. Revenue is pegged at $19.2 billion, on average, within a range of $18.7 billion to $19.9 billion.
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