Hewlett-Packard extended its winning streak on Tuesday, reporting a better-than-expected jump in sales and profits in the second quarter and issuing a third-quarter forecast ahead of most Wall Street expectations.
Shares in the world’s second-biggest computer maker rose 4.9 per cent to $31.16 in after-hours trading as investors welcomed the latest sign that HP has begun to return to form after years of lacklustre performance. Mark Hurd, chief executive, said: “This was another solid quarter and [part of] a long term plan.”
Mr Hurd told the Financial Times that HP had “the opportunity to go after hundreds of billions of dollars or revenues in a growing market,” adding that there was “clearly more work to do” to boost profitability and sales growth at the sprawling technology group.
He said HP continued to examine potential acquisitions that made a good strategic fit with existing businesses priorities, such as mobility, printing, and a new generation of corporate data centres.
If HP can continue to increase revenue growth it could soon overtake IBM as the world’s biggest IT company by revenues. HP took in almost $87bn in revenues last year, compared with about $91bn at IBM.
IBM sold its PC business to Lenovo, the Chinese computer company, last year in order to focus on more profitable markets in IT services.
HP is also set to steal a march on Dell, whose recent stumbles have created an opportunity for HP to chip away at its rival’s traditional lead in the personal computer business.
Dell, which last week warned that its results would miss expectations for the third time in four quarters, is set to report its third quarter numbers on Thursday.
HP reported a net profit of $1.5bn in the second quarter, or 51 cents a share, up 51 per cent from a year ago, driven by sales of personal computers and printing supplies. The earnings were ahead of most analysts’ estimates of 49 cents a share.
HP forecast earnings in the historically slow third quarter of 41-44 cents a share, on sales of $21.8bn. Most analysts had forecast third-quarter earnings of 43 cents a share.
Shares in HP have risen 57 per cent since Mark Hurd took over as chief executive following the ousting of Carly Fiorina last year. He launched a $1.9bn restructuring aimed at cutting costs shortly after taking charge.
HP’s drive to control costs and boost profitablity comes amid a shift in the PC industry, as falling prices and competition from low-cost Asian computer makers increases the pressure on the US companies that have traditionally dominated the business.