H P Continues Resurgence

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H-P Continues Resurgence

By: David Utter
2006-08-17

CEO and president Mark Hurd's strategies are paying off, as Hewlett-Packard bounced higher on news of a stellar third quarter.

The skyward march continues for H-P (HPQ) as its third quarter numbers showed a nice year-over-year increase.

Net revenue moved up 5 percent from the same period last year, to $21.9 billion. Under GAAP terms, diluted earnings per share of 48 cents on net income of $1.4 billion gave H-P an operating margin of 6.9 percent.

The company also announced a $6 billion stock buyback, further cheering up investors. H-P closed yesterday at 34.43, having gained 44 cents on the day. After-hours trading as cited by ECN showed shares leaping 2.12 to 36.55.

Fourth quarter numbers could be even better. H-P has forecasted a revenue figure of $24.1 billion for the quarter, with diluted GAAP earnings per share of 57 to 59 cents.

During their earnings conference call, Hurd touted the acquisition of Mercury Interactive, which took place in July. He also extolled the cost-cutting taking place at H-P, in the form of consolidating the firm's real estate portfolio and cutting jobs as part of the restructuring.

The question and answer session did see a challenge to Hurd, from analyst Tony Sacconaghi of Sanford Bernstein, who noted that while H-P has beaten earnings per share forecasts each quarter since Hurd took the job, revenue has not been beating analyst expectations.

Hurd pointed out that H-P is investing in a number of areas like sales and market development, and that they still have to work at reducing costs.

"By no means am I coming to you today, telling you we're rolling a perfect game on every line. We have got a lot of work left to do," Hurd said.

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Tag: H-P

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