Hewlett-Packard Reiterates Fourth-Quarter Profit Forecast
Hewlett-Packard Reiterates Forecasts That Show Growth
Andrew Harrer/Bloomberg
Revenue in HP’s personal systems group, which includes personal computers, increased 17 percent to $9.92 billion as companies replaced aging machines with new ones running Microsoft’s Windows 7 operating system.
Revenue in HP’s personal systems group, which includes personal computers, increased 17 percent to $9.92 billion as companies replaced aging machines with new ones running Microsoft’s Windows 7 operating system. Photographer: Andrew Harrer/Bloomberg
Aug. 20 (Bloomberg) -- Brent Bracelin, an analyst at Pacific Crest Securities, talks about Hewlett-Packard Co. and Dell Inc.'s financial results and outlook. HP, the biggest computer maker, held to profit and sales forecasts that analysts said may be hard to replicate as it searches for a successor to Mark Hurd, who left as chief executive officer this month. Dell, the world’s third-largest personal-computer maker, forecast third-quarter sales that beat analysts’ estimates and reported second-quarter gross margin that fell short of projections. Bracelin talks with Bloomberg's Phillip Yin from Portland, Oregon. (Source: Bloomberg)
Aug. 19 (Bloomberg) -- Anthony Bianco, author of "The Big Lie: Spying, Scandal and Ethical Collapse at Hewlett Packard," talks with Bloomberg's Julie Hyman and Mark Crumpton about Hewlett-Packard Co.'s plan to replace former Chief Executive Officer Mark Hurd. (Source: Bloomberg)
Hewlett-Packard Co., the biggest computer maker, held to profit and sales forecasts that analysts said may be hard to replicate as it searches for a successor to Mark Hurd, who left as chief executive officer this month.
Profit, excluding some costs, will be $1.25 to $1.27 a share in the period that ends in October, Hewlett-Packard said in a statement today. Revenue will be $32.5 billion to $32.7 billion. Those figures match preliminary forecasts issued Aug. 6, the day the company announced Hurd’s departure.
Hurd’s exit, after a probe found inaccurate expense reports in his name, puts pressure on interim CEO Cathie Lesjak to pursue growth and integrate acquisitions while HP seeks a permanent successor. Since Hurd left, the shares have slumped 12 percent on concern that the search will distract management and his replacement won’t match the executive’s ability to cut costs or spur the gains reflected in today’s results.
“There’s definitely a discount on HP shares now,” said Shaw Wu, an analyst at Kaufman Bros. in San Francisco who has a “buy” rating on the shares and lowered his 12-month price target by $10 to $51 yesterday. “Filling Mark Hurd’s shoes will be tough.”
Third-quarter net income rose 6.1 percent to $1.77 billion from $1.67 billion. Sales rose 11 percent to $30.7 billion, Hewlett-Packard said, in keeping with its earlier announcement.
Full-year earnings will be $4.49 to $4.51 a share, the company said, reiterating what on Aug. 6 was the fourth time it raised forecasts for fiscal 2010. This year’s sales will be $125.3 billion to $125.5 billion. Before Aug. 6, analysts had predicted profit of $4.50 and revenue of $125.1 billion.
Computers, Printers
Revenue in HP’s personal systems group, which includes personal computers, increased 17 percent to $9.92 billion as companies replaced aging machines with new ones running Microsoft’s Windows 7 operating system. The company plans to deliver a tablet computer running Palm’s WebOS software early next year, Executive Vice President Todd Bradley said on a conference call with analysts today.
At the imaging and printing group, which includes printers, sales rose 9 percent to $6.17 billion.
Gross margin, the percentage of sales left after deducting production costs, was 23.8 percent, the results showed.
Hewlett-Packard said yesterday that it hired Spencer Stuart Inc. to lead the search for Hurd’s successor. Under Hurd, CEO since 2005, HP’s share price doubled. Net income will rise to $9.24 billion this year, according to analysts’ estimates. That’s up from $2.4 billion in the year that ended October 2005.
“We are a strong company,” Lesjak told analysts on the call. “We have the right assets, the right strategy, and, frankly, we have the right people to execute the strategy.”
Hewlett-Packard was little changed in extended trading. The shares fell 60 cents, or 1.5 percent, to $40.76 today on the New York Stock Exchange. That left them down 21 percent this year.
To contact the reporter on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net
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