Sales of Ink and Laptops Push H.P. Past Forecast

The Hewlett-Packard Company’s third-quarter sales and profit breezed past Wall Street’s estimates as the company continued to cash in on healthy sales of laptop computers and lucrative printing ink. Shares rose more than 2 percent on a higher financial forecast.
H.P.’s net income for the quarter that ended July 31 was $1.78 billion, or 66 cents a share, a 29 percent jump from the $1.38 billion, or 48 cents a share, in the period a year earlier. Excluding one-time charges, the company, based in Palo Alto, Calif., earned 71 cents a share, 5 cents above the average estimate of analysts polled by Thomson Financial.
Sales were $25.38 billion, a 16 percent increase from the $21.89 billion recorded a year ago. Revenue was more than $1 billion above the $24.09 billion that analysts predicted.
The biggest sales jump came in the Personal Systems Group, which includes desktop and laptop computers and is H.P.’s biggest source of revenue. Bolstered by laptop sales that grew 54 percent over last year, revenue within the segment grew to $8.89 billion this year from $6.92 billion last year.
Last fall, while a boardroom spying scandal connected with H.P.’s investigation of unauthorized leaks to the news media was publicly unraveling, the company reclaimed the title of the No. 1 seller of PCs worldwide from its struggling rival Dell.
H.P. made use of its widespread presence in retail stores and consumers’ growing preference for laptop computers. The company commanded about 19 percent of the worldwide PC market in the second quarter, compared with Dell’s 16 percent, according to the market research company IDC, citing the most recent data available.
Analysts have been concerned about a potential slowdown in H.P.’s imaging and printing group, a closely watched division that includes the high-margin inkjet cartridges that have long been the company’s cash cow. They have worried that Eastman Kodak’s foray this year into the inkjet-printer market with lower-priced products could harm H.P.’s profitability.
But the H.P. operation delivered a strong showing in the third quarter. Its operating profit rose 11 percent from $884 million to $981 million. The unit provided nearly 40 percent of the company’s total operating profit.
Investors have strongly backed the leadership of the chief executive, Mark V. Hurd, whose cost-cutting measures have included jettisoning some 15,000 jobs since he was appointed in 2005, as well as streamlining operations and improving profit margins.
That support has been reflected in a doubling of H.P.’s market value since Mr. Hurd was named chief executive after the tumultuous tenure of Carleton S. Fiorina, who was fired in February 2005. H.P.’s market capitalization stands at nearly $121 billion today, reflecting the addition of nearly $60 billion in shareholder wealth under Mr. Hurd’s watch.
On Thursday, investors drove the stock up after the company upgraded its own outlook.
H.P. said it expected profit in the fourth quarter of 80 cents to 81 cents a share, excluding one-time charges, a few pennies higher than the 78 cents analysts were expecting. Sales are expected to be $27 billion to $27.2 billion, also higher than the $26.46 billion predicted by Wall Street analysts.
H.P. shares climbed 45 cents, to $46.50, in after-hours trading. Before the results were released, the stock had closed down 10 cents at $46.05.