H-P 4Q Results Should Meet Forecasts and Premier stock pick site
Graham Jaggers
Hi Everybody - I thought the report below might be of interest to you.
H-P 4Q Results Should Meet Forecasts
From IDEAglobal
Special to CNBC.com
Last month, amid a flood of earnings warnings from competitors,
Hewlett-Packard Co. {HWP} chief executive officer Carly Fiorina said that
the computer maker would meet fiscal fourth-quarter expectations. Given
strong top-line growth in the range of 15 percent, the company should easily
meet the analyst consensus estimate of $1.03 a share.
H-P reaffirmed strength in each business sector, including inkjet supplies,
printers, servers and personal computers. The strong growth trends are a
continuation of the company's fiscal third-quarter results when revenue rose
15 percent and earnings, excluding gains, came in at 97 cents a share.
Imaging and printing have become two of the biggest contributors for the
company, which in turn are fueling H-P's supply business. The company posted
more than a 300 percent growth rate in this market last quarter. The PC
sector was also a highlight of the quarter, as the company's home-PC
business grew 62 percent and its notebook business grew 93 percent. These
strong trends have continued into the fiscal fourth quarter and, based on
these results, H-P is confident in its continued commitment to meeting
bottom-line results.
H-P's stringent cost-control program should also help it meet its
bottom-line number. Expenses at the company grew a mere 6 percent on its 15
percent revenue growth rate last quarter. The cost of goods sold was down
more than 1 percent, as the company's realigned focus helped it trim excess
at both the gross margin and operating levels. Gross margins rose to 29.7
percent during the quarter, their highest level since the fiscal second
quarter of 1999. On the operating side, margins were 9.2 percent, the
highest level since the fiscal first quarter of 1999. Clearly, margin
expansion due to expense reductions will further help the company meet its
target for the fiscal fourth quarter.
One cause for concern is H-P's high exposure to Europe, which accounts for
32 percent of sales. After Wednesday's close, Dell Computer Inc. {DELL}
warned that it won't meet current revenue expectations because sales to
Europe have slowed. However, even if sales come in somewhat light, strong
consumer PC revenue and high growth in inkjet printer units should offset
any potential slowdown in European sales.
H-P's stock looks poised to rise to 80 in the next two to four weeks.
Published for you by
Graham Jaggers
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