HP profits up as overseas business booms

HP reported on Tuesday that its third-quarter revenue rose 10 per cent, exceeding analyst expectations, as profits from storage systems and servers grew and overseas sales soared.

Revenue for the period was $20.8bn, with a net income of $73m, or 3 cents per share.

Excluding one-time items, the company reported net income of $1.2bn, or 36 cents per share. That compares with revenue of $18.9bn, or 24 cents per share, a year earlier.

Analysts expected HP to earn 31 cents per share, according to a survey by Thomson First Call.

The biggest charge was a $988m hit related to the repatriation of $14.5bn in cash from foreign earnings.

At the close of regular trading, HP shares were down 36 cents to $23.73. The earnings report was issued after the bell.

CEO Mark Hurd said he was pleased with the results, considering the company balanced aggressive pricing competition with the announcement back in July that HP would eliminate 14,500 jobs in the future, or about 10 per cent of the company's total work force.

Despite warnings from Dell and Gateway that PC sales were less than expected, Hurd dismissed concerns that growth in the PC industry is slowing.

"When you look at macro level demand from us, you get words like 'steady'. When you talk about specific areas, such as consumer versus business, or on a regional basis, you get different results," Hurd said.

HP also said revenue for its PC division grew eight per cent year-over-year to $6.4bn, with unit shipments up 14 per cent.

Christopher Foster, an analyst with Technology Business Research, who noted that HP benefited from strong notebook sales, said: "HP appears to have escaped the weakness experienced by Dell in the consumer business."

Hurd said HP's Enterprise Storage and Servers unit performed very well. The division, which sells HP's Integrity, Non-Stop and ProLiant servers, reported revenue of $4bn, which is 20 per cent better than the division did at this time last year.

The company's bread-and-butter Imaging and Printing Group brought in $5.9bn, or five per cent more than it did last year.

Foster said: "Dell is clearly pressuring the inkjet and multi-function businesses. HP is protecting its high margin supplies business by discounting hardware."

On a regional basis, HP said its revenue in the Americas grew eight per cent to $9bn. Europe, the Middle East and Africa grew 10 per cent to $8.2bn, and Asia-Pacific grew 15 per cent to $3.5bn. Taken together, HP's revenue in its various regions grew seven per cent over last year's results.

On a personal level, Hurd said he was pleased with his first official three months in his post and said his team is prepared for the next three months.

Michael Singer writes for CNET News.com