As economic indicators continue to suggest the U.S. economy is headed for — or is already in — recession, Hewlett-Packard reported Tuesday that its first-quarter net revenue increased 13 percent from a year earlier.
“We are raising our guidance yet again, reflecting our confidence in anticipated cost
reductions and share gains in key markets,” said Mark Hurd, HP chairman and CEO. “We added more than 2,000 sales positions in the past year through acquisitions and hiring. HP remains well positioned for profitable growth as we continue to focus on our numerous cost initiatives and improve our market coverage.”
HP’s good news surprised analysts and suggested that there is hope for the economy. “Their guidance was much more bullish than we thought it would be, particularly with what we’ve seen out of Cisco,” Brent Bracelin, an analyst with Pacific Crest Securities, told the Bloomberg financial news service. “Their outlook suggests that things aren’t as bad as people thought.”
Addressing analysts on the company’s quarterly conference call, Hurd credited three factors with driving HP’s earnings growth: “significant cost savings,” additional sales resources and diversification around the globe and across product lines.
Indeed, it was strength in emerging markets that propelled HP’s revenue growth. Revenue in the Asia Pacific region grew 22 percent to $4.9 billion, but only eight percent in the U.S. to $11.2 billion and 15 percent in Europe, the Middle East and Africa to $12.3 billion. Adjusted for currency fluctuations, growth in Asia was 16 percent compared to seven percent in the other regions. And in the BRIC countries — Brazil, Russia, India and China — revenue grew a whopping 35 percent.
“They are capitalizing on the international better than anyone else,” said Jane Snorek of First American Funds in Minneapolis. “They’re taking share from Dell and I think they’re taking…