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HP reports strong third quarter
PC demand unchanged?

By Erica Ogg

Published: Wednesday 20 August 2008

HP beat Wall Street profits estimates this quarter, lead by strong laptop sales growth.

HP reported third-quarter earnings of $2.03bn, or 86 cents per share, excluding one-time charges. Analysts were expecting profits of 83 cents per share. The company's third-quarter results reflect 14 per cent growth over the same quarter a year ago, when HP reported profits of $1.78bn and 66 cents per share.

There were fears leading up to the announcement that slowing demand for PCs in Western nations and a strengthening dollar could mean HP had peaked this year already. But HP is forecasting 95 cents to 97 cents per share for the fourth quarter, and for the full year predicts profits of $30.2 to $30.3bn. None of that takes into account the company's acquisition of EDS.

HP chairman and CEO Mark Hurd batted away reporters' repeated questions about whether he saw any weakening demand for PCs in the US or globally, saying: "We didn't see much of a change from Q2 to Q3."

The US accounts for roughly 30 per cent of HP's sales but Hurd declined to talk about the specific dynamics of international global markets. He described Europe as "a mixed bag" when it came to growth opportunities for his company, and said there was some strength in Asia as well.

Either way, all sectors of HP's business grew last quarter. The Personal Systems Group, which is responsible for the laptop and desktop business, grew sales 15 per cent in the last year. Notebook sales increased 26 per cent since the same quarter a year ago, and the company remains the top PC provider worldwide.

Software and servers also helped push up HP's numbers: blades revenue was up 66 per cent, and software revenue increased 29 per cent to $731m this quarter.