HP buoyed by notebook boom

Booming sales of notebook computers helped lift Hewlett-Packard revenues and earnings well ahead of expectations in the latest quarter, according to figures released on Monday.

The world’s biggest technology group also raised its earnings guidance for the next 12 months and said it did not expect to be hit by any slowdown in technology spending by US companies, reflecting the greater diversity of its business compared with its US rivals.

The latest figures, for the fourth quarter of HP’s fiscal year, confirmed stock market hopes that HP would be largely immune to the domestic economic uncertainties that have made other US technology companies turn more cautious.

HP’s shares have slipped less than 5 per cent during the November technology stock slump on Wall Street, compared with declines of more than 10 per cent for IBM, Dell and Sun.

While reflecting a continuation of the attack on costs that has been under way since Mark Hurd took over as chief executive officer in 2005, HP’s figures were also helped by several favourable factors. These included the lower prices it had to pay for components, as well as a falling US dollar that contributed 4 percentage points of the company’s reported 15 per cent jump in revenues in the period, to $28.3bn.

A worldwide shift away from desktop machines towards portable computers boosted sales of notebooks by 49 per cent from a year before. Overall PC revenues grew by 30 per cent.

HP has been benefiting in particular from a consumer-led adoption of technology in emerging countries, said Mr Hurd. PC sales in China, the company’s third-biggest market, more than doubled from a year ago.

HP also said it had lifted the operating profit margin on its once-struggling PC business by 1.5 percentage points, to 5.8 per cent.

That put it less than half a percentage point below Dell, which until Mr Hurd’s arrival held an overwhelming lead over HP in terms of profitability.

Overall, net income for the quarter rose by 28 per cent to $2.2bn, or 81 cents a share.

Leaving aside amortisation costs – the basis on which Wall Street assesses the company – earnings per share climbed to 86 cents, ahead of consensus expectations of 82 cents.

Revenues of $28.3bn were nearly $1bn higher than Wall Street had expected.