Strong sales growth at Hewlett-Packard

Hewlett-Packard on Thursday notched up its strongest sales growth in seven years, as brisk sales of personal computers capped the latest in a series of strong quarterly results.

Revenues at the company grew 16 per cent to $25.4bn in the third fiscal quarter, led by a sharp increase in sales of personal computers. Net profits were $1.8bn, or 66 cents a share, a 29 per cent improvement on the $1.4bn in net earnings HP recorded in the same period last year. The results were well ahead of Wall Street estimates.

Mark Hurd, chief executive, said the results demonstrated strength across each of HP’s key businesses. “We are executing increasingly well,” he said. “We are continuing to become a more efficient organisation.”

The company has cut costs by more than $1.9bn since Mr Hurd took over as CEO in 2005.

HP’s PC sales jumped 29 per cent in the period, outpacing the broader PC market, which last quarter recorded a growth of 12.5 per cent, according to Gartner, the market research group.

The company said sales of notebooks rose 54 per cent in the period, while desktop revenues increased 12 per cent.

The strong results led HP’s shares 2 per cent higher to $47.02 in after-hours trading. The stock had fallen from a recent high of $49.40 last week.

The company’s overall profitability also increased. Operating margin, which measures profits as a percentage of overall sales, rose to 9 per cent in the quarter, a 1.4 percentage point improvement over the same quarter last year.

Contributing to the solid performance was a 10 per cent increase in sales of servers and storage equipment, an area where HP has struggled to gain momentum in the past.

Looking ahead, HP said it expected earnings per share of 80-81 cents in the co-
ming quarter on sales of $27bn-$27.2.bn.