HP Profits Up 28 Percent during Second Quarter Thanks to Sales of PCs & Other Hardware Products

Technology giant Hewlett-Packard (News - Alert) saw its second-quarter profit grow 28 percent with increased global sales, as well as significant profits reported in its PC and server business.

For the quarter ending April 30, the world's largest manufacturer of personal computers saw profits in PCs increase 23 percent, while unit shipments in the personal systems group, which includes PCs, increased 20 percent.

Overall, HP saw quarterly profits of $2.2 billion, or 91 cents a share, up from $1.72 billion, or 71 cents a share, a year earlier. Excluding charges related to restructuring and acquisitions, earnings increased to $1.09 from 86 cents. Company revenue increased 13 percent to $30.85 billion.

Notebook revenue for the quarter was up 17 percent, while desktop revenue increased 27 percent, the company reported.

HP's enterprise storage and server group saw a 31 percent gain in revenue to $4.5 billion.

The company also reported that revenue from outside of the United States in the second quarter accounted for 66 percent of total HP revenue, with revenue in the nations of Brazil, Russia, India and China increasing 25 percent while accounting for 10 percent of total HP revenue.

'HP had an exceptional quarter with strong performance across every region,' said Mark Hurd, HP chairman and chief executive officer. "We're winning in the marketplace, investing for the future and confident in the enormous opportunity that lies ahead.'

HP is projecting third-quarter earnings of $1.05 to $1.07 a share, and revenue of between $29.7 billion to $30 billion.

The company is also predicting revenue growth of approximately 8 to 9 percent for the year. Earnings for the year are now predicted in the range of $4.45 to $4.50, up from HP's previous estimate of $4.37 to $4.44.

HP is also positive about its recent purchase of Palm for $1.2 billion. Palm makes smartphones powered by the Palm webOS mobile operating system.

Last month, Todd Bradley, executive vice president of the personal systems group at HP, said, "The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share. Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market.' 

Last month, Gartner (News - Alert) analysts said the professional PC market is gradually picking up, driven by PC replacements in mature markets, in an apparent reference to businesses looking to replace existing computers. Top Garnter analyst Mikako Kitagawa predicted in April that "major" PC replacement demand driven by Windows 7 will become more apparent in the second half of 2010 and the beginning of 2011.

HP was the leader in worldwide PC shipments in the first quarter of 2010, but its growth was below the worldwide average, Gartner reported. HP faced continued pressure from its Asian rivals that were gaining market share.  However, Gartner predicted last month that HP's strength could be apparent as the professional market rebounds.