Hewlett-Packard Co. today said that stronger than expected PC and printer sales will result in higher than anticipated earnings for the first quarter.
The computer maker, based in Palo Alto, Calif., now expects revenues and gross profit margins to rise slightly compared with the fourth quarter, resulting in earnings "substantially above" current consensus analyst estimates of 16 cents per share.
Previously, HP forecasted revenues to be down slightly from the fourth quarter, with gross margins to be approximately flat with the fourth quarter.
"Economic conditions around the world continue to be challenging, but consumer technology spending is clearly showing some strength," Carly Fiorina, HP chairman and CEO, said in a statement announcing the improved outlook. "As a result, we are seeing better than expected revenues in our PC and imaging and printing businesses. … Gross margins have improved in our PC and imaging and printing businesses, as well as in our services business."
The upbeat news comes as HP forges ahead with its "controversial acquisition of Compaq Computer Corp., a merger thats being opposed by the heirs of HPs late co-founders.
The deal, supported by the boards of both companies, still must the win the approval of a majority of shareholders in an as-yet unscheduled vote, as well as the blessing of U.S. regulators.
Last week, the European Commission gave a green light to the merger, saying the deal did not raise antitrust concerns.
"A careful analysis of the merger ... and of the competitive forces in the markets concerned has shown that HP would not be in a position to increase prices and that consumers would continue to benefit from sufficient choice and innovation," the commission said in a statement.
While the Federal Trade Commission is continuing to review the merger, analysts have expressed confidence that the deal will clear U.S. hurdles.
HP will detail its first quarter after the market closes on Feb. 13. HP also announced that it will host its next semi-annual meeting for security analysts on Feb. 27 in New York.