HP's coffers continue to swell

Computer and printer maker HP has reported increased revenue and net income, attributing the gain to growth across its business in the most recent quarter.

The company said net income rose 26 per cent from $1.2bn to $1.5bn, or from 42 cents per share to 55 cents, for its first quarter of fiscal 2007 ending 31 January. Revenue jumped 11 per cent, from $22.7bn to $25.1bn, it said.

Revenue from the company's PC group jumped 17 per cent to $8.7bn in the quarter, and the software group's revenue increased 81 per cent to $550m, buoyed by HP's acquisition of Mercury Interactive, the company said.

Chief executive Mark Hurd said in a conference call with reporters: "It was a good start to the year with another solid set of results," pointing to improved profit margins and broad revenue growth. And he raised guidance for financial performance of the current quarter, boasting that it's the sixth consecutive quarter he's done so.

Factoring out some one-time charges, the company had net income of 65 cents per share - 3 cents better than the average prediction of analysts surveyed by Thomson First Call. HP also exceeded those analysts' revenue projection of $24.3bn by about $800m.

However, Sanford C Bernstein analyst Toni Sacconaghi cautioned in a report that profits guidance issued by HP is typically conservative, and investors have begun factoring in that practice. Consequently, many expected HP to beat analyst profits-per-share expectations materially, he said.

Indeed, in after-hours trading, HP stock dropped 53 cents, or 1 per cent, to $42.60.

HP forecast revenue of $24.5bn for the second quarter of fiscal 2007, a notch above the $24.1bn expected by analysts. Profits per share are expected to be 63 to 64 cents, he said, which compares cleanly to 63 cents expected by analysts.

Gartner analyst Carl Clauch said: "The Personal Systems Group continues to perform very well," adding that another strong point was the "rapid absorption of Mercury into the software business [that improved] already impressive margins there".

Hurd expressed pleasure at the PC business gains - in particular the simultaneous gains both in market share, with a 19 per cent unit shipment increase, and in operating profit, which increased from $293m the previous year to $414m. HP's PC market share surged at the end of 2006 at the expense of number two Dell, which trails by a significant margin.

Hurd said: "You can get more share but you may not like the results. Being able to be both is key. I'm particularly pleased we achieved these share gains while posting record operating margins."

Stephen Shankland writes for CNET News.com