HP beats forecasts and raises outlook

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Hewlett-Packard, the world’s second-biggest computer maker, continued to reap the fruits of its $1.9bn cost-cutting drive on Wednesday, after it reported higher profits for the third quarter and raised its outlook for the year.

HP reported net earnings of 48 cents a share – sharply higher than the 3 cents a share reported one year ago, when the company took a charge related to the repatriation of foreign profits. The results beat Wall Street estimates.

The performance marked the eighth successive quarter in which earnings at the group exceeded estimates.

Mark Hurd, who launched the company’s $1.9bn re-structuring after he assumed the role of chief executive last year, said: “We remain focused on growth and continue to execute well in the sweet spots in the market.”

He said HP was on track to wrap up its latest cost-cutting round by the end of the year, although he added that the company would “never be done looking for ways to optimise” its costs.

Sales grew 6 per cent to $21.9bn as HP expanded its footprint in growing Asian markets and saw renewed vigour in its core US market.

Looking ahead, HP said it expected earnings for the full year of $2.14 to $2.16 a share, up from an earlier estimate of $2.02 to $2.06 a share.

Shares of HP jumped 6.6 per cent after the closing bell. They rose 1.3 per cent to $34.43 ahead of the announcement.

Analysts say HP has benefited in recent months from improved execution and from stumbles at Dell, its biggest personal computer rival. Dell is set to report earnings on Thursday.

Mr Hurd said that the company’s personal computer division notched margins of 4 per cent – the highest since HP bought Compaq, a rival personal computer maker, for $21bn in 2002.

“We continue to see a competitive environment [in PCs], but I would not call it an extraordinarily difficult [environment],” he said.

HP said its board had approved a $6bn share buyback programme, the biggest in the company’s 67-year history.

HP, which makes products ranging from laptop computers to printers and servers that power corporate data networks, said revenues in the Americas grew 8 per cent year on year to $9.7bn.

Asia also experienced strong growth with revenue up 7 per cent.

Sales in Europe, the Middle East and Africa lagged however, with revenues up just 2 per cent.

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