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SAN FRANCISCO—Hewlett-Packard
Co. may report profit that topped analysts’ estimates
after the world’s largest personal-computer maker won
customers with new laptops and widened its lead over
Dell Inc.
Earnings
probably rose to 66 cents a share in the third quarter
ended July 31, excluding some acquisition costs, from 52
cents a year earlier, according to the average of 22
analysts’ estimates compiled by Bloomberg. At least
seven analysts say profit may have exceeded the average
projection.
Sales
may have gained 9.7 percent to $24 billion, according to
the survey, putting the Palo Alto, California-based
company within reach of $100 billion in annual revenue
for the first time. Hewlett-Packard beat Dell on laptop
orders while costs for parts such as memory chips fell,
boosting profit.
“They’ve
got a really good lead, and I think they will maintain
that lead for a few years,’’ said Chuck Jones, a San
Francisco-based analyst for Atlantic Trust Private
Wealth Management, which manages $17 billion including
Hewlett-Packard shares. Jones also owns the stock
personally.
The
company is scheduled to report results Thursday after
the close of regular New York trading. Spokeswoman Emma
McCulloch declined to comment. Dell spokesman Bob
Pearson also declined to comment.
Hewlett-Packard has beaten analysts’ profit estimates
each quarter since Mark Hurd took over as chief
executive officer in April 2005. This year may be the
second straight in which the company tops International
Business Machines Corp. in sales.
Hewlett-Packard’s worldwide PC shipments rose 37 percent
in the three months ended in June, while Dell’s fell 4.9
percent, according to Framingham, Massachusetts,
researcher IDC. Hewlett-Packard probably had the biggest
PC shipment growth in 10 quarters, said Andrew Neff, a
Bear Stearns analyst in
New York.
In the
US, the world’s largest PC market, Hewlett-Packard’s
shipments rose 26 percent last quarter and Dell’s
dropped 11 percent, IDC said.
Hurd,
50, won laptop buyers by putting new models in retail
stores so consumers could try them out, a strategy Dell
is mimicking. Hewlett-Packard has a bigger sales network
than rivals, supplying more than 100,000 retailers, and
gets more benefit from its in-store marketing efforts
than competitors.
Hewlett-Packard stock has reached the highest in almost
seven years last week, $49.84, and has climbed 12
percent this year.
Round
Rock, Texas-based Dell has added 4.8 percent this year.
Since he
joined Hewlett-Packard, Hurd has eliminated three layers
of management, hired hundreds of salespeople and boosted
marketing spending and perks for retailers that promote
Hewlett-Packard’s products. He also cut jobs, merged
data centers and pared real estate to chop more than $3
billion in costs.
“What
we’re seeing is the results of several years of
reorganization and restructuring that all seems to have
come together,’’ said David Daoud, a PC analyst for IDC.
Michael
Dell, who reclaimed the CEO title at his namesake
company in January, backed away from a strategy he held
more than 20 years of selling directly to buyers. In
June he started to use retailers including Wal-Mart
Stores Inc. to reach consumers.
After
spending $150 million last year to boost service because
customers complained of long delays when they called for
help, Dell still saw its consumer-satisfaction level
drop this year, according to a University of Michigan
survey released this week. Hewlett-Packard’s score rose.
Hewlett-Packard continued to win printer sales from Dell
and Lexmark International Inc., said UBS AG analyst
Benjamin Reitzes.
Printer
makers typically sell their products at a loss to
promote profitable supplies such as ink. Hewlett-Packard
boosted its customer base over the past year with price
cuts and may now reap the rewards with a 10-percent gain
in supply sales, said New York-based Reitzes. He rates
the shares “buy’’ and said he doesn’t own them.
If the
gains hold through year-end, Hurd may be able to put to
rest questions about the wisdom of Hewlett-Packard’s
$18.9 billion acquisition of Compaq Computer Corp.,
engineered by his predecessor Carly Fiorina in 2002.
“They do
have major earnings momentum, and are finally seeing
cost savings as a result of the merger,’’ said Barry
Ritholtz, director of equity research for New York-based
Fusion IQ, which doesn’t own the stock. |
