Hewlett-Packard reported slightly better-than-expected third-quarter results last night, helped by strong server sales, but the company expressed caution about business demand, and shares fell 2 per cent in extended trading.
HP's business is stabilizing, chief executive Mark Hurd said on a conference call with analysts, but when asked whether enterprise demand is picking up, he said, “I think what we've seen so far this year is what we'll see for the rest of year.”
Mr Hurd said he was encouraged by the stability, but was not yet ready to “call it a turn.”
The company took share in personal computers and servers in the quarter, and made positive comments about its services business, said Edward Jones analyst Bill Kreher.
Nevertheless, he said, "investors may have been looking for a little more bullish commentary on the macro level. So while HP was willing to say business is stabilizing, they don't yet have the conviction to call an uptick."
HP's business touches on many parts of the technology sector, from personal computers and services to servers and printers, and its results are an indicator of industry health.
There were positive signs in the results, but Europe is dragging on the company, said Jane Snorek, senior technology analyst with First American Funds, which owns HP stock.
“Europe is their problem. It's still weak,” she said.
For the fourth quarter, HP forecast earnings excluding items to be $1.12 a share - ahead of Wall Street estimates - and revenue to be up roughly 8 per cent sequentially.
HP expects fiscal 2009 revenue and earnings to be at the midpoint of its previous outlook. In May, HP forecast earnings per share of $3.76 to $3.88 before items. On a net basis, it forecast earnings per share of $3.02 to $3.16.
At the same time, the company said it expected revenue to decline between 4 per cent and 5 per cent.
HP reported net earnings of $1.6 billion, or 67 cents a share, in the fiscal third quarter ended July 31st, down from $2.03 billion, or 80 cents a share, a year ago.
Excluding items, HP posted a profit of 91 cents a share, beating the average analyst estimate of 90 cents a share, according to Reuters Estimates.
Reuters