HP beats street with strong PC sales

HP posted better-than-expected financial results Wednesday, citing strong sales in its PC group.

HP has posted better-than-expected financial results buoyed by strong growth in the company's PC group.

Excluding certain charges, HP reported a profit of $US1.7 billion or $US0.52 per share on revenue of $US21.9 billion for its fiscal third quarter, ended July 31. Analysts had been expecting earnings per share of $US0.47 on revenue of $US21.8 billion according to Thomson Financial.

The company's Personal Systems Group saw revenue grow 8 per cent, year-over-year, with notebook sales jumping 14 per cent and desktop PC sales up 5 per cent. Operating profit for the group was up too, totalling $US275 million for the quarter. Last year the group's profit was $US163 million for the same period.

HP's results -- considered a bellwether for the industry -- come during a slowdown in PC sales growth and earnings warnings from companies such as Intel, Advanced Micro Devices and Dell.

Dell has warned of lower profits for its most recent quarter because of aggressive pricing and slow commercial sales worldwide.

Worldwide, PC sales grew by 9.7 per cent year-over-year during the second quarter of 2006, a slowdown from 12.9 per cent growth in the first three months of the year.

HP's other main lines of business did not fare as well as the Personal Systems Group. Revenue in the company's enterprise servers and storage business was up only 3 per cent, thanks in part to declines in HP's PA-RISC and Alpha systems businesses.

The company's printer business grew by 5 per cent but was hurt by a 3 per cent slowdown in consumer hardware sales, HP said. Overall, the group remained highly profitable, however, earning $US884 million on $US6.2 billion in revenue

HP's Services revenue was up 1 per cent year-over-year, totalling $US3.9 billion, and software revenue was up 30 per cent, totaling $US318 million for the quarter.