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November 19, 2008

HP predicts stable '09 business

HP's stock rose more than $4 a share yesterday on a company report that Hewlett-Packard total revenues in 2009's Q1 will remain unchanged from the current quarter's numbers. HP floated a preliminary report, one week ahead of its full Q4 and fiscal 2008 statement, which said the company's revenues were $33.6 billion for the period ended Oct. 31. Net revenue rose 19 percent, but that figure included sales from newly-acquired EDS.

HP's business other than the EDS services revenues grew, too. "Excluding the impact of the EDS acquisition, HP revenue grew 5 percent year over year, or 2 percent when adjusted for the effects of currency," said HP's release on the early figures. Fourth quarter net revenues in total rose $5.3 billion from a year earlier. The company finished 2008's fiscal year with record sales of $118.4 billion in net revenue, up $14.1 billion from fiscal 2007.

Earnings rose slightly in HP's preliminary report on the quarter, up 4 percent. HP's CEO said the company increased market share in some businesses. He added that Hewlett-Packard will get to the other side of the current economic downturn in better shape.

“HP delivered another solid quarter as it continues to benefit from its global reach, diverse customer base, broad portfolio and numerous cost initiatives,” said Mark Hurd, HP chairman and chief executive officer. “Our ability to execute in a challenging marketplace differentiates HP, enabling it to increase share, expand earnings and emerge from the current economic environment as a stronger force.”

But analysts said that it was HP's fiscal 2009 outlook that triggered the shot of investor confidence.

HP sees a first quarter with sales and profit numbers similar to Q4's, no small feat considering the swoon of sales across the board in worldwide businesses. Since the full Q4 report has been scheduled for about a week later than HP usually reports, the preliminary news was released in the usual week after mid-month of November.

In a swirl of Generally Accepted Accounting Practices (GAAP) and Earnings Per Share (EPS) figures, HP made a case for keeping its pace of revenues and earnings.

In providing its outlook for the first fiscal quarter and the full fiscal year 2009, the company has taken into consideration the current economic environment and the relative strength of the US dollar. Based on current currency exchange rates, the company now expects an unfavorable year-over-year currency impact on revenue of approximately 5 percentage points in the first quarter and roughly 6 - 7 percentage points for the full year and this impact is reflected in its outlook.

For the first fiscal quarter of 2009, HP expects revenue of approximately $32.0 billion to $32.5 billion, GAAP diluted EPS in the range of $0.80 to $0.82, and non-GAAP diluted EPS in the range of $0.93 to $0.95. Q109 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.13 per share, related primarily to the amortization of purchased intangibles.

For the full fiscal year 2009, HP expects revenue of approximately $127.5 billion to $130.0 billion, GAAP diluted EPS in the range of $3.38 to $3.53, and non-GAAP diluted EPS in the range of $3.88 to $4.03. FY09 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.50 per share, related primarily to the amortization of purchased intangibles.

HP will provide more detailed information about its fourth quarter and full year results in its previously scheduled Q408 earnings announcement and Webcast on Nov. 24. HP is providing this preliminary earnings information due to the current economic environment and its year-end earnings announcement being scheduled to occur later in the month relative to most quarters.

09:00 AM in News Outta HP, Newsmakers | Permalink

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