Hewlett-Packard surprised Wall Street on Tuesday by saying its earnings will slightly exceed analysts' expectations, going against the grain as other technology bellwethers have slashed forecasts and posted weak results in the sagging economy.
NEW YORK — Hewlett-Packard surprised Wall Street on Tuesday by saying its earnings will slightly exceed analysts’ expectations, going against the grain as other technology bellwethers have slashed forecasts and posted weak results in the sagging economy.
Its shares jumped $4.25, or 14.5 percent, to close at $33.59 Tuesday.
The Palo Alto, Calif.-based computer and printer maker expects earnings of 84 cents a share and adjusted earnings of $1.03 a share for the three months ended in October. This is slightly better than the $1 a share, excluding items, that analysts polled by Thomson Reuters are expecting.
HP forecast revenue of $33.6 million, just ahead of analysts’ expectations of $33.09 billion.
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The projections show that the cost cuts by HP Chief Executive Mark Hurd have helped squeeze more out of sales, even as they’re weighed down by the recession, said Toni Sacconaghi, an analyst at Sanford C. Bernstein in New York.
“It’s a validation of the fact that HP is generally extremely well-positioned in a tougher economic environment versus its peers,” said Sacconaghi, the top-ranked computer analyst by Institutional Investor magazine.
The company, which plans to release full quarterly results next Monday, said it was benefiting from “global reach, diverse customer base, broad portfolio and numerous cost initiatives.”
HP’s $13.9 billion acquisition of Electronic Data Systems (EDS), 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 counting EDS, revenue grew 5 percent, or 2 percent when adjusted for currency effects.
HP’s solid guidance comes as many other tech bellwethers are hunkering down because consumers and businesses are delaying spending on PCs and other equipment.
Research firm IDC recently cut its prediction for global growth in information-technology spending to 2.6 percent in 2009, down from its earlier forecast of a 5.9 percent increase.
Cisco Systems warned earlier this month that orders for its computer-networking gear fell abruptly in October and said it expects sales to fall in the current quarter.
Intel, the world’s No. 1 chip maker, cut its fourth-quarter profit and revenue forecast last week because of lower demand.
Goldman Sachs analyst David Bailey said HP’s results reflect the company’s diversity and cost-cutting abilities rather than broader factors that would lift other hardware makers.
In the current fiscal quarter, which ends in January, HP forecast earnings of 80 to 82 cents a share, with adjusted earnings of 93 to 95 cents a share, on sales of $32 billion to $32.5 billion.
Analysts predicted a profit of 93 cents a share on sales of $33.7 billion.
Material from Bloomberg News was used in this report.