By Connie Guglielmo Aug. 18 (Bloomberg) — Hewlett-Packard Co. , the world’s largest personal-computer maker, reported third-quarter profit that met analysts’ estimates after job cuts and other expense reductions helped make up for sluggish technology demand. Excluding some costs, profit was 91 cents a share in the quarter ended July 31, Hewlett-Packard said in a statement today. Analysts surveyed by Bloomberg anticipated 90 cents. Chief Executive Officer Mark Hurd cut salaries, eliminated workers and reduced marketing expenses to counter the slump in technology spending. Revenue from computer services grew, boosted by Hewlett-Packard’s $13.2 billion acquisition of Electronic Data Systems Corp. “Services revenue is up big, and that shows me that they will continue to grow that business and the integration is growing well,†James Brehm, an analyst at the research firm Frost & Sullivan Inc. in San Antonio. “If H-P is any indication, we may be turning the corner economically.†Hewlett-Packard, based in Palo Alto, California, was little changed in late trading after the results were released. The shares, up 21 percent this year, closed at $43.96 on the New York Stock Exchange. ‘Good Numbers’ Third-quarter net income dropped 19 percent to $1.64 billion, or 67 cents a share, from $2.03 billion, or 80 cents, a year earlier. Sales fell 2.1 percent to $27.5 billion in the period. Analysts had estimated $27.3 billion. “It’s just a bunch of good numbers — we beat the revenue and we beat the EPS,†Hurd said in an interview. “When you look at the companies that have been reporting, it’s good news to see someone beat a revenue number in general.†Revenue this quarter will grow about 8 percent from the previous three months, the company said, suggesting about $29.6 billion. Excluding some costs, profit will be about $1.12 a share. Analysts on average anticipated sales of $29.8 billion and profit of $1.06. Revenue from printers and supplies, such as ink, fell 20 percent to $5.7 billion. Printer shipments dropped 23 percent. Profit from that business was $960 million, yielding a margin of 17 percent. Third-quarter revenue in Hewlett-Packard’s server and storage business declined 23 percent to $3.7 billion. PC Business Sales in the PC unit fell 18 percent to $8.4 billion last quarter. Unit shipments climbed 2 percent. The operating profit margin in the business narrowed to 4.6 percent, from 5.7 percent a year earlier. Hewlett-Packard took the PC market lead from Dell Inc. in 2006, and has expanded that edge every quarter since then. The company relies on a network of 80,000 retailers, including the Best Buy Co. and Wal-Mart Stores Inc. chains. To attract more price-conscious shoppers, the company has expanded into netbooks — stripped-down laptops that typically sell for less than $400. In the calendar second quarter, Hewlett-Packard ’s PC shipments rose 2.8 percent, giving it a 19.6 percent share of the worldwide market, according to Stamford, Connecticut-based Gartner Inc. That contrasted with a 17 percent drop in PC shipments for Dell. Round Rock, Texas-based Dell reports its earnings on Aug. 27. EDS helped Hewlett-Packard increase services revenue 93 percent last quarter to $8.5 billion. The profit margin was 15 percent, up from 13 percent a year earlier. ‘Great Things’ The business, which accounts for about 30 percent of sales, earns higher profit margins than Hewlett-Packard’s hardware divisions. The company ranks second to International Business Machines Corp. in that market. Hurd, 52, is expanding in other areas as well. The company’s ProCurve is challenging Cisco Systems Inc. in the networking-equipment field. “I feel very good about H-P being the beneficiary of great things when this economy turns around,†Hurd said. “In these kind of economies, good companies can perform.†To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net .
