Hewlett-Packard Co. offered a fourth-quarter outlook slightly above Wall Street's expectations Tuesday despite the sagging economy, going against the grain even as other technology bellwethers have slashed forecasts and posted weak results in recent weeks.
The Palo Alto, California-based company expects earnings of 84 cents per share and adjusted earnings of $1.03 per share for the three months ended in October. This is slightly better than the $1 per share, excluding items, that analysts polled by Thomson Reuters are expecting.
HP forecast revenue of $33.6 million, compared with analysts' expectations of $33.09 billion.
The company "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, chairman and chief executive, in a statement.
HP's $13.9 billion acquisition of Electronic Data Systems Corp., completed in August, boosted the quarter's revenue, which grew 19 percent year-over-year — or 16 percent when adjusted for the effects of changing currency exchange rates. Without accounting for the EDS purchase, HP's revenue grew 5 percent, or 2 percent when adjusted for currency effects.
HP's solid guidance, which sent shares sharply higher in premarket trading, comes as the technology sector, one of the last safe holdouts in the global economic crisis, is beginning to hurt from its effects. Earlier this month, Cisco Systems Inc. warned that orders for its computer networking gear fell abruptly in October, and said it expects sales to fall in the current quarter. Cisco is by far the world's largest maker of networking equipment.
And Intel Corp., the world's No. 1 chip maker, cut its fourth-quarter profit and revenue forecast last week because of lower demand for its semiconductors.
Declining PC demand around the world is hurting technology companies, and research firm IDC recently lowered its global information technology spending growth forecast to 2.6 percent in 2009, down from its earlier forecast of a 5.9 percent increase.
Looking ahead, HP forecast first-quarter earnings of 80 cents to 82 cents per share, with adjusted earnings of 93 to 95 cents per share, on sales of $32 billion to $32.5 billion.
Analysts predict a profit of 93 cents per share on sales of $33.72 billion.
The company plans to post its fourth-quarter results on Nov. 24.
Shares jumped $3.98, or 13.5 percent, to $33.32 in morning trading Tuesday.
