HP, Dell Quarter Earnings Soothe Recession Fears
SAN FRANCISCO, Aug 19 (Reuters) - Dell Inc (NASDAQ:DELL) and Hewlett-Packard Co (NYSE:HPQ) dismissed worries about weakening technology demand, reporting broad-based strength from corporate customers and only hints of weakness from consumers.
Both faced questions on Thursday about the strength of the recovery in spending on technology, after Cisco Systems Inc (NASDAQ:CSCO) CEO John Chambers' warned last week about "unusual uncertainty" in the global economy.
Analysts said fears persisted about the strength of any recovery in consumer spending, as growth moderates in Europe and China as well as in the United States.
But executives from the two largest U.S. personal computer makers waved off such fears, even as shares of Dell fell 3 percent after it posted slightly weaker-than-expected growth margins and HP fell about 1 percent.
"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, on a conference call with the media.
Lesjak also fielded queries on a successor for former CEO Mark 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 to be messy for the company, HP is doing its best to move on, naming an executive headhunting firm on Wednesday to lead the search for a new CEO. The company will consider both internal and external candidates.
Lesjak said HP is "looking forward, not back" and reiterated that shareholders are behind the company. She also 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 former NCR chief 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."
HP is a dominant presence in a number of technology markets, from PCs and printers to services and servers, and is a bellwether for spending in the sector. Its results on Thursday pointed to solid -- if unremarkable -- growth.
HP had reported preliminary results back on Aug. 6 -- when it also announced Hurd's stunning departure -- so Thursday's numbers had not been expected to move its stock, which has fallen 12 percent since Hurd resigned.
HP said earnings rose 6 percent as expected, helped by strength in servers and personal computers.