HP Q4 profits jump 14pct despite sales dip

The Palo Alto, Calif.-based firm reported a quarterly profit of $2.4 billion, or 99 cents per share, compared with a profit of $2.1 billion or 84 cents per share a year earlier.

The company saw its revenue fall eight percent to $30.8 billion, up 12 percent sequentially.

In a statement, Chief Executive Mark Hurd said that the company's "relentless focus on driving efficiencies across the business has given H-P a significant competitive advantage

"HP's solid performance in Services drove record profit, and the accelerated pace in signings creates strong momentum going into 2010," said Hurd. The executive previously said that the quarter was "fueled by significant growth in China."

The world's largest computer maker, helped by its recurring revenue streams and exposure to the consumer market, has been taking share in both servers and PCs in faltering economy.

The  recent 3Com deal "makes a lot of strategic sense" as it will not only more than double HP's networking revenue, but also increases HP's exposure to the rapidly growing Chinese market,  Dinesh Moorjani, analyst at Broadpoint AmTech said in a note.

As the PC and server markets bottomed in the first quarter of 2009 and a recovery in enterprise IT spending still lies ahead, pent-up PC demand on the corporate side should lead to a PC upgrade cycle, potentially in 2010, with Windows 7 and new Intel platforms serving as catalysts, Moorjani said.

IT research firm Gartner on Monday also raised its 2009 outlook for personal computer shipments to 298.9 million, up 2.8 percent from 2008.  Gartner previously expected a 2 percent decline in shipments for 2009.

Shipments in the third quarter of 2009 were much stronger than we expected, and that alone virtually guaranteed we would see positive growth this year," said George Shiffler, research director at Gartner.

HP estimates full fiscal year 2010 revenue will be approximately $118.0 billion to $119.0 billion, up from its previous estimate of $117.0 billion to $118.0 billion. It estimates revenue of approximately $29.6 billion to $29.9 billionin the first fiscal quarter of 2010, HP said in a statement.