Can just plain good earnings help HP?
Hewlett-Packard beats Street estimates, boosts guidance and downplays Europe's effect on results. The question is: Will investors agree?
If this was an ordinary week, Hewlett-Packard's (HPQ) strong fiscal-second-quarter results and its boost in guidance would be cause for celebration.
You could see HP's stock soaring after hours and expect a good, strong open on Wednesday for the U.S. market.
HP shares were up 2.5% to $47.91 after hours; they fell 1.5% to $46.79 in regular trading.
But stocks may open lower overall on Wednesday because of the uncertainty created by the European debt crisis. And HP may get hit just as Home Depot (HD) was today.
Home Depot's fiscal-first-quarter results beat Street estimates, and the home-improvement retailer boosted its guidance. And yet the stock ended down 2.4% to $34.73.
So, here's what HP said. Its business was boosted by corporate buyers replacing aging server computers and consumers buying new PCs.
It earned $2.2 billion in net income on revenue of $30.8 billion. Net income was up 28% from a year ago. Revenue was up 13%.
Using generally accepted accounting practices, earnings were 91 cents a share, up 28% from a year ago. Under non-GAAP rules, earnings were $1.09 a share, up 27% from a year ago's 86 cents.
Analysts and investors care about the non-GAAP earnings because they remove a number of one-time charges. Wall Street had expected $1.06 a share in earnings, Reuters said, and revenue of $29.7 billion.
Then, it boosted its full-year guidance to a gain of 8% to 9%. That means roughly $123.7 billion to $124.9 billion. In February, the company was seeing revenue of $121.5 to $122.5 billion.
So, the big numbers and the guidance were solid wins. So, too, were the numbers in HP's main businesses. Revenue in its server business was up 31% to $4.5 billion.
Imaging-and-printer sales (including sales of supplies like printer ink) were up $8% to $6.4 billion. Hardware sales were up 13%.
Desktop and laptop computers sales were up 21% to $10 billion. Units sold were up 20%.
While the PC shipment growth sounds very good, BusinessWeek noted, market research firm Gartner says rival Acer's shipments grew 54.3%. Dell shipments were up 21.4%, and China's Lenovo saw shipments jump 59.2%.
The results were good enough that analyst Shannon Cross of Cross Research said they should alleviate concerns that Europe's problems would cause big problems going forward.
On a call with analysts, Cathie Lesjak, HP's chief financial officer, said the company has been gaining market share over rivals such as Dell (DELL), which reports fiscal-first-quarter results on Thursday, and Oracle (ORCL). "We are doing better than just the economic recovery would suggest."
HP plans a foray into tablet-style computers that would compete with Apple's (AAPL) iPad, and CEO Mark Hurd is using acquisitions to expand into smart phones and the networking equipment market dominated by Cisco Systems (CSCO).
The worry about the declining euro's effect on HP shares is a big reason why its shares have fallen 16.5% since peaking in mid-April.
Apple is off 6.8% from its April high, with Dell off 13.5% and Oracle down 13%.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The Dow Jones Industrial Average (+0.3%) continues to hold a slim gain while the Nasdaq (-0.4%) and S&P 500 (unch) have slid into the red.
As mentioned in our opening update, biotechnology has exerted significant pressure on the Nasdaq. The iShares Nasdaq Biotechnology ETF (IBB 255.17, -5.97) has widened its loss to 2.3% while the health care sector has extended its decline to 0.7%. Similar to health care, technology (-0.2%) is among the laggards while another ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
VIDEO ON MSN MONEY
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'