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Hewlett-Packard's 1st Quarter Profit Exceeds Forecasts

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By MICHAEL LIEDTKE, The Associated Press

Published: February 20, 2008

SAN FRANCISCO - Hewlett-Packard Co. started its fiscal year with a first-quarter profit above analyst expectations and predicted its performance will improve in the months ahead, providing a ray of hope in the gathering economic gloom.

The Palo Alto-based maker of computers and printers said Tuesday that it earned $2.13 billion, or 80 cents a share, for the three months ended in January. That represented a 38 percent increase from net income of $1.55 billion, or 55 cents a share, in the same period a year earlier.

If not for expenses stemming from past acquisitions, HP said it would have earned 86 cents a share. That figure exceeded the average estimate of 81 cents a share among analysts surveyed by Thomson Financial.

Revenue for the period totaled $28.5 billion, a 13 percent increase from the previous year. Analysts, on average, had forecast revenue of $27.6 billion.

Management also painted a rosy picture for the rest of the fiscal year ending in October. Excluding certain one-time expenses, it expects to earn from $3.50 to $3.54 a share, outstripping the previous analyst estimate of $3.36 a share, according to Thomson Financial.

The upbeat forecast, coupled with the strong first quarter, impressed investors. HP shares surged $2.31, or 5.3 percent, in Tuesday's extended trading after gaining 8 cents to finish at $43.95 in the regular session.

As it has in past quarters, HP is benefiting from rising computer sales and steady cost-cutting dictated by Mark Hurd, who took over as the company's chief executive nearly three years ago.

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