Hewlett-Packard Surges on Strong Earnings and Guidance

Hewlett-Packard

is up big on Friday after posting a successful first quarter in fiscal year 2013. The Palo Alto, California computer maker's EPS was down 11 percent as compared to the same period in 2012. However, it easily topped analysts' expectations of $0.71, closing the quarter at $0.82 per share. First quarter revenue was also down on a year-over-year basis, finishing six percent below Q1 FY 2012. As with EPS, though, HP's revenue of $28.4 billion topped expectations, finishing around $470 million above the Wall Street consensus.

Revenue was down year-over-year in five of HP's six segments. The results are as follows: Enterprise Group: down four percent Enterprise Services: down seven percent Personal Systems: down eight percent Printing: down five percent Software: down two percent HP Financial Services was the only segment that grew, closing the quarter one percent above the same period in 2012.

Oddly enough, in a company that mostly took a step back (compared to Q1 FY 2012) and with the mobile trend in recent years, HP's desktop sales were up 10 percent during the quarter. Meanwhile, HP's laptop sales were down 14 percent. The results may be a function of a major decline in consumer demand for HP computers versus commercial demand. Consumer revenue in this segment declined 13 percent during the quarter. Meanwhile, commercial revenue declined four percent. As commercial entities typically favor desktop computers, the relatively stronger demand from businesses may be the reason why HP's desktops surged while laptops declined during the quarter.

HP expects to top the Wall Street consensus of $0.77 for the quarter. The company plans to finish the second quarter in the $0.80 to $0.82 range. Also, HP intends to finish FY 2013 in the $3.40 to $3.60 range. If correct, HP will top analysts' expectations of $3.32.

As a result of its successful first quarter and strong guidance, HP has surged on Friday. Since bottoming out in the low-teens in late November of 2012, HP gradually climbed into the mid-to-high teens, closing at $17.10 on Thursday. On Friday, HP has eclipsed $18 for the first time in the past five months. As of this writing, HP is around $18.65 - its highest point in the past six months. The stock is up approximately nine percent.