Hewlett-Packard profit jumps 25 pct, beating analyst forecasts; company raises 2010 outlook

Hewlett-Packard Co.’s profit swelled 25 percent in the latest quarter because of cost-cutting and a stronger showing from its personal-computer division.

Revenue was up in most of the technology company’s major divisions and HP raised its 2010 outlook, citing “accelerating market momentum.”

The numbers show that technology spending by corporations is creaking back to life. HP is a bellwether because it is the world’s biggest maker of PCs and printers. And HP’s latest results are the first from a major tech company to include the full month of January.

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HP said after the market closed Wednesday that its net income was $2.3 billion, or 96 cents per share, for the three months ended Jan. 31. In the same period last year, it earned $1.9 billion, or 75 cents per share.

Excluding one-time items, HP said it would have earned $1.10 per share. That beat the average estimate of $1.06 per share, according to analysts surveyed by Thomson Reuters.

Revenue jumped 8 percent to $31.2 billion, exceeding analyst forecasts for $30.0 billion.

HP’s services division stumbled, however. Revenue fell 1 percent even as the division got more profitable, a difference likely explained by CEO Mark Hurd’s aggressive cost cuts to that business. Services represent HP’s latest challenge against rival IBM Corp. and are a cornerstone of a major makeover for HP.

HP’s 2010 forecast now calls for $121.5 billion to $122.5 billion in revenue, exceeding the $120 billion analysts were expecting.

Net income is expected to be $3.79 per share to $3.86 per share, or $4.37 per share to $4.44 per share excluding charges. Analysts were expecting $4.37 per share, excluding charges.

In the last quarter, HP’s PC division posted its first revenue increase in over a year, rising 20 percent to $10.6 billion. Operating profit was up 22 percent.

One reason could be an early lift from the rollout of new computers loaded with Microsoft Corp.’s Windows 7 operating software. However, many corporations are still likely delaying their purchases of PCs with Windows 7. Last month, Stacy Smith, chief financial officer of Intel Corp., said big companies still need time to test how the new software interacts with their internal applications. Intel supplies 80 percent of the microprocessors that power modern PCs and computer servers.

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Already, new chips from Intel are helping to boost server sales, which slumped as corporate and government technology budgets shrunk. HP’s server division reported an 11 percent revenue jump Wednesday.

IBM’s latest numbers included a 37 percent jump in revenue in the division that sells servers with Intel chips. HP and IBM are tied as the world’s No. 1 server sellers.

HP shares rose 50 cents, 1 percent, to $50.65 in after-hours trading.

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