HP shares rise on rosy 4Q outlook

The Palo Alto, Calif.-based company's stock price gained $2.47, or 5.7 percent, to $46.16 on the positive outlook and third-quarter profits that beat analysts' forecasts. HP reported its third quarter results after the market closed Tuesday.

Two areas tempering investors' enthusiasm about HP's stock, however, are the company's slumping printer sales--which are important because higher printer sales allow HP to sell more of its expensive printer ink--and the effect of a strengthening dollar on HP's overall revenue.

HP has benefited from a weak dollar because it makes deals done in other currencies more valuable. Even with the rosy results HP reported Tuesday, some analysts said they were concerned by those pockets of weakness that could slow HP's very steady growth.

"Despite the relatively strong performance and healthy guidance driven by continued strength in the (personal computer) segment, we are incrementally more cautious on HP shares as multiple signs of weakness for HP emerged during the quarter," Thomas Weisel Partners analyst Doug Reid wrote in a note to clients.

HP's net income for the May-July period jumped 14 percent to $2.03 billion while sales rose 10 percent to $28 billion. The revenue rise would have been 5 percent if it were adjusted for currency fluctuations.

HP expects profit for the August-October quarter of between $1.01 and $1.03 per share, above the $1 that analysts had been forecasting. Sales are expected to be between $30.2 billion and $30.3 billion, slightly ahead of forecasts.