Hewlett-Packard (HPQ) earnings always hit the quarterly cycle late. Its fiscal puts it a month behind most companies, so it gets a chance to run the anchor leg of the reporting race.
HPQ is the last big industrial that will report before the holidays, so it was Wall St.’s last chance to see if there was any gas left in the global economic tank. A big miss by Hewlett-Packard could certainly have moved the Nasdaq and tech stocks down another 5%.
The easy story about HP is that notebook sales helped drive up earnings. Revenue for laptops was up 49% and revenue at the company’s PC unit moved up 30% to $10.1 billion. And, in the company’s fiscal fourth quarter ending in October, GAAP operating profit was $2.6 billion and GAAP diluted earnings per share (EPS) was $0.81, up from $0.60 in the prior-year period.
But, more important than the raw top-line numbers was the fact that HP showed strength across all regions. Even the US, where the economy is supposed to be slowing, grew 10% for HP. Asian revenue moved up 20% and the Europe region was remarkably strong with 19% growth.
If HP’s numbers had been bad, shares in Asia could have been pushed down overnight. Instead, they rallied, pulled higher by tech. Casio Computers moved up 3.7%. Toshiba moved up 2.5%.
Whether the market moves up or down between now and year-end, HP will have done more than its part. It demonstrated that a well-run company can turn in results that best the estimates of most, that a modest economy does not have to kill corporate earnings, and that there is still life in every region where most multinationals do business.
Douglas A. McIntyre
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