Hewlett-Packard sales led by printer ink refills

SAN JOSE, Calif. -- Hewlett-Packard Co.'s fourth-quarter profit easily exceeded Wall Street's expectations, bolstered by surging laptop sales and continued strong demand for highly profitable printer ink.

The board of the Palo Alto-based computer and printer maker also authorized an additional $8 billion for stock buybacks, a sign the company believes its shares are undervalued.

Strong PC sales have fueled much of HP's growth, but the company doesn't expect that business to keep growing as fast as it has. Printer ink continues to be the company's cash cow.

A brighter financial forecast helped lift shares 45 cents in after-hours trading Monday to $49.89. During the regular session, before the results were reported, the stock fell $1.31 to $49.44.

HP's net income leaped 28 percent in the three months ended Oct. 31, rising from $1.69 billion, or 60 cents per share, to $2.16 billion, or 81 cents per share.

Excluding one-time charges, HP's profit was 86 cents per share, four cents higher than the average estimate of analysts polled by Thomson Financial.

Sales jumped 15 percent over last year to $28.29 billion, nearly $1 billion more than the $27.4 billion Wall Street was expecting.

Laptop sales jumped 49 percent over last year to $5.16 billion, the company's highest-selling single category. Desktop computer sales rose 15 percent to $4.21 billion.

HP is the world's No. 1 PC seller. Since stealing the title away from Dell Inc. more than a year ago, HP has expanded its lead to nearly 5 percentage points, commanding 20 percent of the market, compared with Dell's roughly 15 percent, according to the latest data from market researcher IDC.

Despite the gains in PC sales, HP's most profitable business is still printer ink.

The company derived 42 percent of its $2.63 billion in total operating profits in the latest quarter from its Imaging and Printing Group, nearly double the amount contributed by the Personal Systems Group, which includes PCs.