HP reported stronger than expected 3rd quarter earnings amid strong growth in notebook and printer business. Non-GAAP earnings beat analyst estimates, as did revenue, which rose 10 percent year-over-year.

"It appears they have made fundamental, largely sustainable changes in the business," said Cindy Shaw, an analyst at Moors & Cabot Capital Markets. "The guidance they offered today was above expectations, and we're seeing fundamental improvement in margins in this business pretty quickly under this new CEO. Margins in both the PC and imaging and printing businesses, which each account for 30 percent of revenue, were better than expected."

HP announced non-GAAP earnings per share of $0.36 after a three-cent tax benefit, above analyst estimates of $0.31, and revenues of $20.8 billion, beating estimates of $20.47 billion.

The Palo Alto company's net income, however, fell sharply due to tax adjustments from the repatriation of $14.5 billion in foreign earnings.

On a GAAP basis, HP earned $73 million, or 3 cents per share, in the three months ended July 31, compared with $586 million, or 19 cents per share, in the same period last year.

"The numbers are surprisingly strong," said Barry Mills, vice president, sector portfolio manager and senior research analyst with the Boston Company Asset Management. "I normally expect HP to miss Q3 and I expect Dell to beat it, so this is a big role reversal."

By: DocMemory
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