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Hewlett-Packard Co. beat Wall Street's expectations Wednesday, when the computer maker reported that fiscal third-quarter profit surged on strong printer and laptop sales. The company's shares gained nearly 6 percent in after-hours trading.
For the three months ended July 31, HP earned $1.38 billion, or 48 cents a share, compared with $73 million, or 3 cents per share, in the same quarter last year.
The year-ago numbers were dramatically lower because of a tax charge that resulted when the Palo Alto, Calif.-based company pulled $14.5 billion from foreign earnings and "repatriated," or reinvested, those profits in the United States.
Sales in the fiscal third quarter rose 5 percent to $21.89 with battery like Hp Compaq 292389-001 battery , Hp DD880A battery , HP DG988A battery , HP DG103A battery , HP Pavilion ZT3000 battery , HP Pavilion ZT3400 battery , HP PP2182D battery , HP Pavilion ZD7000 battery , HP DM842A battery , HP DP390A battery , HP HSTNN-DB02 battery , HP PP2200 battery billion from $20.76 billion last year. If not for currency fluctuations, sales would have increased 6 percent.
Excluding one-time items, the company earned $1.48 billion, or 52 cents per share, up nearly 40 percent from the same quarter last year.
On that basis, which does not comply with generally accepted accounting principles, HP beat Wall Street expectations by 5 cents per share. Analysts were expecting the company to earn $1.37 billion, or 47 cents a share, on sales of $21.8 billion, according to a Thomson Financial survey.
"HP delivered another solid quarter with strong revenue growth, improved margins and healthy cash flow," said Mark Hurd, HP's chief executive. "We gained share without sacrificing margins and continue to execute well against our long-term plan."
Revenue from HP's printer division grew 5 percent to $6.2 billion. HP revenue from laptops increased 14 percent, as the overall "personal systems" division sold $6.9 billion in desktops, laptops and other computers, 8 percent more than the same quarter last year.
Software sales were particularly strong, with 30 percent year-over-year growth. The company, which sold $318 million in software last quarter, will likely complete the acquisition of management software company Mercury Interactive Corp. in the current quarter.
Analysts were impressed that HP managed to report relatively strong sales in each of the company's three divisions.
"It looked really good — it's nice to see this consistency from HP," said Martin Reynolds, vice president of research firm Gartner Inc.
He added that the only "dark spot" was the company's "enterprise storage and servers" category, which only inched up 3 percent to $4.1 billion.
HP competes fiercely against IBM Corp. for corporate clients that spend billions of dollars on giant computer servers and data storage.
"They're struggling against IBM's initiative," Reynolds said. "It's been that way for several quarters, and I'm a little disappointed they haven't addressed it yet. "They need to be more focused."
HP, which employs about 150,000 people, has been slashing jobs in offices worldwide since launching an aggressive cost-cutting campaign in July 2005. The company shed 1,900 jobs last quarter. Hurd said "several thousand jobs" would be cut in the current quarter, and the layoffs would likely end at that point.
Hurd also emphasized in a conference call Wednesday afternoon that HP does not use Sony battery packs in its laptop computers. HP rival Dell Inc. is recalling 4.1 million lithium-ion batteries made by Sony because the battery packs could overheat or even explode.
The company's shares rose 46 cents, or 1 percent, to finish at $34.43 Wednesday on the New York Stock Exchange, before the earnings were announced. In after-hours trading, HP was trading at $36.43, up $2.