Higher sales will feed through to the bottom line, and the Palo Alto, California-based company predicted that earnings per share before exceptional items will be in the range of $0.69 to $0.70, well above its previous estimate of $0.63 to $0.64. On a GAAP basis, it said EPS would be in the range of $0.64 to $0.65, compared to its earlier forecast of $0.57 to $0.58.
HP said that an increase in second-quarter revenue and profitability was driven by strong operational results in the personal systems group, its PC unit that supplies about one third of its revenue and has now overtaken Dell as the world’s largest supplier.
With Dell now mired in accountancy problems and a major reorganization, HP is now reaping the rewards of its dominance in the market place. The other area where HP has done better than expected is in industry-standard servers, where again it has caused Dell problems.
HP stock opened 2.92% higher at $43.80 on the news. The company’s upgrade also boosted shares across the tech sector, which has been under pressure after concern about slowing demand in the US.
HP said it expects third-quarter revenue to rise 9% to a range of $23.7bn to $23.9bn. Most analysts predict the company will top the $100bn revenue market this year with the consensus figure of $104bn.
HP said it was forced to issue the update following the inadvertent disclosure of financial information relating to HP’s recently completed second fiscal quarter through an internal email sent Monday evening to a single outside party. HP said it decided the most prudent course of action under the circumstances was to publicly release updated revenue and earnings guidance for the quarter prior to the markets opening Tuesday.
Meanwhile, several journalists targeted by HP in its hunt for the source of boardroom leaks are seeking damages for alleged invasion of privacy. Writers from the New York Times, BusinessWeek, and CNET Networks are seeking financial compensation and may sue. San Francisco attorney Terry Gross, who represents three BusinessWeek reporters and New York Times reporter John Markoff, said HP has done something illegal and…caused severe damage.
