Hewlett-Packard Profit Rises 28%

Hewlett-Packard Profit Rises 28%, Topping Estimates (Update1)

By Connie Guglielmo

Nov. 19 (Bloomberg) -- Hewlett-Packard Co., the biggest personal-computer maker, reported a profit that beat analysts' estimates after extending its lead over Dell Inc. The company plans to buy back as much as $8 billion in shares.

Net income increased to $2.16 billion, or 81 cents a share, from $1.7 billion, or 60 cents, a year earlier, the Palo Alto, California-based company said today in a statement. Excluding some costs, profit was 86 cents a share, exceeding analysts' estimates for the 11th straight quarter.

Chief Executive Officer Mark Hurd, who cut 15,000 jobs and closed offices to buoy profit since taking over in 2005, is winning sales for Hewlett-Packard's printers, software and server computers. After retaking the top spot in PC sales last year, Hewlett-Packard has widened its lead over Dell by using a network of retailers to woo consumers.

``We expect that momentum to continue,'' Bill Fearnley Jr., an analyst at FTN Midwest Securities Corp. in Boston, said before the report. He recommends buying the shares. Under Hurd, the company has become ``a much stronger competitor.''

Sales rose 15 percent to $28.3 billion. Hewlett-Packard in August had forecast profit of up to 81 cents a share and sales of as much as $27.2 billion. Analysts had projected sales of $27.3 billion.

Company's Forecast

Profit this quarter will rise to 80 cents a share on sales of $27.4 billion to $27.5 billion, Hewlett-Packard said. Analysts had estimated earnings of 78 cents and revenue of $27 billion, according to a Bloomberg survey.

Hurd, 50, has topped his forecasts in each quarter since succeeding Carly Fiorina. He also delivered on a goal to surpass $100 billion in annual sales for the first time, with revenue tallying $104.3 billion for the year ended Oct. 31. That makes the company the world's largest maker of computer technology, beating International Business Machines Corp. for the second year.

Hewlett-Packard, also the world's biggest printer maker, fell $1.13 to $49.62 at 4 p.m. in New York Stock Exchange composite trading. The shares, which have gained 20 percent this year, reached a seven-year high of $53.41 on Nov. 6, the 50th anniversary of the company's initial public offering.

PC Sales

Hurd has leaned on a network of more than 100,000 retailers to help sell PCs, particularly the notebook models favored by consumers. In the calendar third quarter, Hewlett-Packard's shipments rose 17 percent in the U.S., the world's biggest market for PCs, according to research firm IDC in Framingham, Massachusetts.

U.S. shipments at Dell fell 4.8 percent, IDC said. Michael Dell, who returned as CEO in January, has added retail partners such as Wal-Mart Stores Inc. to try to win back consumers. His Round Rock, Texas-based company reports results Nov. 29.

Hewlett-Packard also is expanding its market share with printers and servers, computers used to run corporate networks and Web sites, according to UBS AG's Benjamin Reitzes, the second-ranked computer analyst by Institutional Investor magazine.

To bolster returns in software, Hurd has spent more than $6.5 billion on six acquisitions. That's helped turn a money- losing unit two years ago into Hewlett-Packard's fastest-growing business.