SAN FRANCISCO, Nov 22 (Reuters) - Hewlett-Packard Co (NYSE:HPQ) raised fiscal 2011 results forecasts and a solid debut by new CEO Leo Apotheker calmed investors nervous about his vision, sending the technology company's shares up 3 percent.
Strong commercial computer, server and storage sales spurred better-than-expected quarterly results for HP, easing fears that the No. 1 technology company by sales was distracted by internal turmoil. Former chief Mark Hurd departed in August after accusations of sexual harassment.
HP, the world's No. 1 PC maker, shrugged off the government spending cuts that have plagued Cisco Systems Inc. (NASDAQ:CSCO).
Apotheker, who took over Nov. 1, reassured Wall Street by sounding a predictably confident note on HP's prospects.
"He was solid. He did exactly what he needed to do," said Gleacher & Co analyst Brian Marshall. "Coupled with the strong financial performance, it made for a good quarter."
Apotheker joked he may have set a world record for travel the past few weeks as he jetted around the globe to familiarize himself with HP's sprawling business.
He provided few details about his startegy to deal with cutthroat competition in a consolidating technology sector. He did reaffirm that central themes will be software, now 3 percent of HP's business, and research spending.
"I am particularly committed to continue our focus on operational efficiency. However, you need to invest to create sustainable operating leverage. We need to do this on a continuing basis," he said.
Under Hurd, HP became known for cost control rather than investment. Analysts said Apotheker must restore stability and poise after a tumultuous four months that saw Hurd's departure and a nasty spat with one-time partner Oracle Corp (NASDAQ:ORCL).
Apotheker stuck close to his script on a conference call with analysts. The German executive highlighted HP's strengths and opportunities and said he needed time to learn the company's ins and outs. He had little to say about the Oracle row other than to label it a distraction.
HP's results helped assuage fears that public sector budget cuts were beginning to hurt technology providers. HP did warn that "uneven" consumer performance has affected its outlook. Consumer markets comprise roughly a quarter of its revenue.
"Demand is not as bad as people had thought," said Wedbush Morgan Securities analyst Kaushik Roy. "After Cisco guided cautiously, people got nervous. Now it appears demand is not as bad."
HP raised its fiscal 2011 outlook, forecasting earnings excluding items of $5.16 to $5.26 a share on revenue of $132 billion to $133.5 billion.
For the current quarter, HP forecast an adjusted profit of 1.28 to $1.30 a share on revenue of $32.8 billion to $33 billion, above Wall Street's targets.
HP's fiscal fourth-quarter results provided a fresh opportunity for Apotheker, a former SAP AG (SAPG.DE) CEO, to make an impression on analysts and investors.
Revenue in storage and servers surged 25 percent. Sales in the PC group rose only 4 percent, but revenue from commercial PCs rose 20 percent and margins in the business were vastly improved on better pricing and component costs.
HP's networking business also turned in a good performance, following the recent purchase of 3Com.
Its adjusted operating margin rose 12 percent, in line with Wall Street targets. Component costs weakened, something rival Dell Inc (NASDAQ:DELL) also mentioned last week.
Performance was solid but not exceptional in printing and services segments, key to recurring revenue and profit streams. Services revenue was flat, while print revenue rose 8 percent.
HP reported net earnings for the fiscal fourth quarter ended Oct. 31 of $2.54 billion, or $1.10 a share, up from $2.41 billion, or 99 cents a share, a year earlier.
Excluding items, the company earned $1.33 a share, better than the average analyst estimate of $1.27 a share, according to Thomson Reuters I/B/E/S.
Revenue rose 8 percent to $33.3 billion, above Wall Street's estimate of $32.75 billion.
Shares of Palo Alto, California-based HP closed at $43.25 and rose to $43.94 in extended trading. (Reporting by Gabriel Madway and Edwin Chan. Editing by Robert MacMillan and David Gregorio)