HP and Dell results good news for global recovery

 

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By Reuters

Posted on 20 Aug 2010 at 08:18

Dell and HP have dismissed worries about weakening technology demand, reporting global strength from corporate customers and only slight weakness from consumers.

It comes as positive news for HP as it continues its search for a new CEO following the sudden departure of Mark Hurd in the midst of a messy expense account controversy.

Analysts had raised concerns about a recovery in consumer spending, as growth stutters in Europe and China as well as in the United States.

But executives from the two largest US personal computer makers waved off the fears.

HP

“We saw better-than-normal quarterly seasonality, as well as good balanced performance across all of our three regions," said Cathie Lesjak, HP's interim chief executive.

HP said earnings rose 6% as expected, helped by strength in servers and personal computers.

Storage and server revenue rose 19%, while PC revenue rose 17% and sales in the printing group climbed 5%.

Lesjak also fielded queries on a successor for Hurd, who stunned Wall Street by resigning two weeks ago over expense account inaccuracies linked to a female marketing contractor.

Though Hurd's exit has proved messy for the company, HP is doing its best to move on and has said it would consider both internal and external candidates.

When you have a winning strategy, I don't see the motivation to change it

Lesjak said HP was "looking forward, not back" and suggested HP was not looking for major change in a new leader. "When you have a winning strategy, I don't see the motivation to change it," she said.

It is unclear whether HP will go for an established technology veteran, or try to snag up-and-coming talent - as it did in 2005 with Hurd, who is credited with reviving the company's fortunes.

Whatever the case, Wall Street will be closely monitoring the process. Hurd was lauded by investors for his cost-cutting, but the next CEO of the world's top technology company by revenue will be expected to ramp up growth - no easy task for a company its size.

"Looking ahead, they're going to start running against tougher comparisons and potential currency pressures, so we're cautiously optimistic for the second half of the year," said Gartner analyst Martin Reynolds. "Although there are troubling signs, we think the technology industry will remain robust."

Dell

Dell said it expected demand for PCs among corporate customers to continue for the "next several" quarters. It was forecasting "seasonal improvements" in the third quarter, thanks to sales to the federal government and business customers.

"This is a pretty stretched-out cycle and we think it'll continue for several quarters," Dell chief financial officer Brian Gladden said. "Commercial growth was really the key for us, servers, networking systems, storage, services. That was up about 43%."