HP SHARE SOAR
Hewlett-Packard Co.'s stock surged Thursday after the computer and printer maker reported a third-quarter profit that beat expectations, raised its fourth-quarter and full-year guidance and said its board had authorized a $6 billion share buyback.
HP shares rose $2.62, or almost 8 percent, to $37.05 in pre-market trading. If that price holds when the stock market opens, it would be above the stock's previous 52-week high of $36.23 on the New York Stock Exchange.
CEO Mark Hurd said an aggressive cost-cutting campaign would wind down in the current quarter, when several thousand employees would lose their jobs.
But Hurd, who oversaw the elimination of 1,900 jobs last quarter, said he would continue to reduce bureaucracy in the 67-year-old company. The low-key Midwesterner, who took over HP in March after the ouster of Carly Fiorina, said he spent much of the past year talking to employees and customers about how to make the 150,000-employee company more efficient.
"We're a very big company and still are - and that created a lot of complexity," Hurd said Wednesday in an interview with The Associated Press. "The feedback I got was that this is a company with great technology, great people and great services, but frankly it was hard to deal with - there was a lot of bureaucracy."
Hurd was bullish about HP's prospects after announcing fiscal third-quarter profit that easily beat Wall Street's expectations. The results were announced Wednesday after financial markets closed.
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 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.
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."
Revenue from HP's printer division grew 5 percent to $6.2 billion. HP sales of 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.
Hurd vowed that the $4.5 billion acquisition - HP's biggest since the $19 billion purchase of Compaq Computer Corp. in 2002 - wouldn't be saddled with HP's legacy of superfluous bureaucracy.
"I don't think the Mercury Interactive acquisition will do anything to increase bureaucracy at HP," Hurd said. "We met the enemy and it was us. We need to go simplify."
For the fourth quarter, HP now expects to earn 57 cents to 59 cents per share, or 61 to 63 cents per share excluding items. For the full year, the company expects earnings in a range of $2.14 to $2.16 per share, or $2.31 to $2.33 per share excluding amoritization charges. Analysts, on average, were expecting 59 cents per share for the fourth quarter and $2.07 for the full year, according to Thomson. Those estimates typically exclude unusual items.
HP shares rose $2.62, or almost 8 percent, to $37.05 in pre-market trading. If that price holds when the stock market opens, it would be above the stock's previous 52-week high of $36.23 on the New York Stock Exchange.
CEO Mark Hurd said an aggressive cost-cutting campaign would wind down in the current quarter, when several thousand employees would lose their jobs.
But Hurd, who oversaw the elimination of 1,900 jobs last quarter, said he would continue to reduce bureaucracy in the 67-year-old company. The low-key Midwesterner, who took over HP in March after the ouster of Carly Fiorina, said he spent much of the past year talking to employees and customers about how to make the 150,000-employee company more efficient.
"We're a very big company and still are - and that created a lot of complexity," Hurd said Wednesday in an interview with The Associated Press. "The feedback I got was that this is a company with great technology, great people and great services, but frankly it was hard to deal with - there was a lot of bureaucracy."
Hurd was bullish about HP's prospects after announcing fiscal third-quarter profit that easily beat Wall Street's expectations. The results were announced Wednesday after financial markets closed.
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 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.
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."
Revenue from HP's printer division grew 5 percent to $6.2 billion. HP sales of 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.
Hurd vowed that the $4.5 billion acquisition - HP's biggest since the $19 billion purchase of Compaq Computer Corp. in 2002 - wouldn't be saddled with HP's legacy of superfluous bureaucracy.
"I don't think the Mercury Interactive acquisition will do anything to increase bureaucracy at HP," Hurd said. "We met the enemy and it was us. We need to go simplify."
For the fourth quarter, HP now expects to earn 57 cents to 59 cents per share, or 61 to 63 cents per share excluding items. For the full year, the company expects earnings in a range of $2.14 to $2.16 per share, or $2.31 to $2.33 per share excluding amoritization charges. Analysts, on average, were expecting 59 cents per share for the fourth quarter and $2.07 for the full year, according to Thomson. Those estimates typically exclude unusual items.
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