HP raises estimates for Q1

Higher than expected sales of desktop PCs, printers, scanners and digital cameras have prompted Hewlett-Packard to increase its previous earnings estimates for the first fiscal quarter that ended January 31.

In an announcement today, the company said the revised estimates are "based on an up-tick in consumer demand" that has affected its hardware lines.

When HP reported its fourth-quarter earnings in November, the company said it expected first-quarter results to be down slightly from the fourth quarter, based on normal seasonal trends.

The increased hardware sales, combined with continuing cost-savings measures, mean that the company now expects increased gross margins with expenses approximately flat with fourth-quarter levels. HP said it expects earnings "substantially above" current consensus analyst estimates of 16 cents a share.

"Economic conditions around the world continue to be challenging, but consumer technology spending is clearly showing some strength," said Carly Fiorina, HP's chairman and CEO, in a statement. "As a result, we are seeing better than expected revenues in our PC and imaging and printing businesses. We are not relenting on the expense side and continue to take decisive actions to improve our cost structure.

"We remain convinced that we are up to the task of successfully integrating Compaq and creating a powerful new HP," Fiorina said.

First-quarter results will be reported in a conference call with analysts after the stock market closes on February 13.

Late last month, HP's merger target, Compaq Computer, also announced that it had beaten analyst expectations for the fourth quarter and was raising its earnings estimates for 2002.