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HP releases profit estimates for fiscal 2010

The technology sector has been hard hit in 2009 with the global economic slowdown . Both corporations and consumers have been holding off on upgrading computers and spending on IT tech. HP sees that changing in 2010.

Reuters indicates that HP has unveiled its estimates for fiscal 2010 with a revenue forecast slightly below what analysts predicted from the computer giant. Despite a lower estimate than Wall Street expected, HP CEO Mark Hurd told investors on a call that HP would outperform the industry.

Hurd said, "I know we'll get questions about how fast the market's going to grow. Whatever that answer is that's handed to us in 2010, we will grow faster. We expect the IT industry to return to growth in 2010 and believe that HP will outpace the market."

HP is expecting corporate spending to resume in 2010 with companies ready to replace aging machines with newer systems. That replacement cycle for desktop and notebook computers will be fueled in part by the anticipated Windows 7 OS launching soon.

While HP is expecting spending to resume in 2010, HP CFO Cathie Lesjak doesn't expect the increase to be robust. She said, "we haven't planned for it to be really robust and we're waiting to see what really happens."

Reuters reports that HP is forecasting earnings excluding items of $4.20 to $4.30 per share on revenue of $117 billion to $118 billion for fiscal 2010. If it hits those numbers, the profit margin will be in the 11.4 to 11.6% range. Analysts were expecting HP estimates to be $4.23 in profit per share on revenues of $118.1 billion.

HP expects to grow its PC business 3 to 5% over the year and to grow its services business by 2 to 4%. HP gobbled up EDS this year in a deal worth $13 billion to become the second largest provider of tech services in the industry, behind IBM.

Analyst Ronald Gruia from Frost & Sullivan said, "The PC rebound is primarily going to be driven by strong retail notebooks, which is HP's sweet spot, and that bodes really well for them. Their services margin will continue to improve and I think they're managing the EDS integration well."





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