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Dow 30 Earnings: Hewlett-Packard – Fiscal Fourth Quarter 2010
Hewlett-Packard (HPQ - Free Hewlett-Packard Stock Report), one of the nation’s largest diversified providers of computer hardware, services, and software, has reported earnings of $1.10 a share for the fiscal 2010 fourth quarter (ended October 31st), compared with the $0.99 recorded in the year-earlier period and about 9% above our $1.01 estimate. For the full fiscal year, the company earned $3.69 a share, an 18% increase over the fiscal 2009 tally of $3.14 and slightly ahead of our $3.60 call.
Overall, the company turned in a decent performance in the final quarter of the year. Sales in its storage systems/servers, notebook/desktop computer, and imaging/printing businesses advanced 25%, 4%, and 8%, respectively, in the period. Sales in services matched the year-earlier tally, and software sales inched up 1%. Operating margins in all of HP's business segments expanded, with imaging/printing the lone exception. Lower component costs and a more profitable product mix contributed to the wider margins. Stock repurchases (of another 96 million shares in the October quarter) also enhanced share net.
Including an estimated $0.04-a-share gain from the disposition of real estate and $0.22 of restructuring, acquisition, and intangibles costs, management looks for January-quarter earnings per share of $1.06-$1.08. The company expects full fiscal 2011 share earnings of $4.42-$4.52. Accordingly, we are raising our estimate for the new fiscal year by a dime, to $4.45.
When all was said and done, investors traded these shares a touch higher following the earnings release.
About The Company: Hewlett-Packard provides computing and imaging solutions and services to consumers and businesses. The company operates in six segments: Imaging & Printing (20% of 2010 revenue), Personal Systems, (32%), Enterprise Storage & Servers (15%), Services, (27%), Financing (3%), and Software, (3%). Research and development costs amounted to 2.3% of 2010 revenue.
At time of this article’s writing, the author did not have positions in any of the companies mentioned.