Profit Climbs at Hewlett-Packard
Hewlett-Packard
(HPQ) - Get Report
grew its bottom line 16% in its fiscal second quarter, as the company's foothold in overseas markets continued to boost sales.
The results were no surprise: H-P preannounced its financial results last week, along with the news that it struck a
technology consulting company
EDS
(EDS)
.
H-P's stock has declined more than 5% since news of the deal first surfaced last week, on investor concerns that EDS's profit margins and slow sales growth make it a poor acquisition choice for H-P.
In a brief conference call with reporters following the earnings release Tuesday, CEO Mark Hurd said the deal will give H-P better reach into key corporate accounts. And he reiterated H-P's belief that it can make EDS run leaner and meaner under the H-P flag.
"Cost opportunities take many forms," Hurd said. "But make no mistake, we will get the cost right."
In the three months ended April 30, H-P had revenue of $28.3 billion, up from $25.5 billion at this time last year.
H-P said sales growth was driven by strength across its various business groups, with notebook sales up 31% year-over-year and software revenue up 28%.
Sales outside of the U.S. accounted for 70% of H-P's overall revenue, with revenue in Brazil, Russia, India and China growing 26% from this time last year.
One weak spot was sales of industry-standard servers that feature off-the-shelf microprocessors made by
Intel
(INTC) - Get Report
and
AMD
(AMD) - Get Report
, which posted flat revenue growth year-over-year. That's well below its recent performance -- in the past four quarters, H-P's industry-standard server revenue growth has ranged from 11.9% to 16.7%.
H-P had net income of $2.1 billion, or 80 cents a share, vs. $1.8 billion, or 65 cents a share in the year-ago period.
Excluding various charges related to the amortization of purchased intangibles, H-P said it earned 87 cents a share, in line with its pre-announcement.
H-P's operating profit margin increased to 9.2% vs. 8.3% at this time last year.
Looking ahead, H-P forecast sales between $27.3 billion and $27.4 billion, with adjusted EPS between 82 cents and 83 cents in the current quarter. The average analyst estimate calls for 82 cents EPS on sales of $27.3 billion in the current quarter.
Shares of H-P were off 10 cents at $46.36 in extended trading Tuesday.