*NEWS*HP:EARNINGS MORE THAN DOUBLE
*NEWS*HP:EARNINGS MORE THAN DOUBLE
2003-11-20 at 11:52:00 am #7916
HP Earnings More Than Double
Hewlett-Packard Fourth-Quarter Earnings Surpass Wall Street Expectations on Strong SalesSAN JOSE, Calif. (AP) — Hewlett-Packard Co.’s fourth-quarter earnings inched past Wall Street estimates Wednesday as the computer giant reported strong sales in its traditional printing market, but executives remained cautious about growth in 2004.
For the three months ended Oct. 31, Palo Alto-based HP earned $862 million, or 28 cents per share, compared with $390 million, or 13 cents per share, in the same period last year.
Excluding special items, HP earned $1.1 billion, or 36 cents per share. That compares with $721 million, or 24 cents per share, in the same period of 2002.
Fourth-quarter revenue was $19.85 billion, up 10 percent from $18.05 billion in the fourth quarter of 2002.
Analysts were expecting HP to earn 35 cents per share cents per share on revenue of $19 billion, according to a survey by Thomson First Call.
“HP’s excellent fourth quarter performance capped a fiscal year in which we delivered on our commitments,” said Carly Fiorina, HP’s chairman and chief executive. “We grew revenue and market share. We exceeded our integration and cost saving goals ahead of schedule.”
All five of HP’s business divisions were profitable in the quarter — the first time since the $19 billion acquisition of Compaq Computer Corp. 18 months ago. Chief financial officer Bob Wayman said the fourth quarter marked the last time HP would break out integration expenses as special items.
The company’s efforts to steal corporate clients from IBM Corp. and Dell Inc. faltered earlier this year. But strong server sales brought HP’s “enterprise systems” division a fourth-quarter operating profit of $106 million, compared with a $129 million loss in the same period last year.
HP’s “imaging and printing” division posted its first operating profit exceeding $1 billion. The company shipped nearly 13 million printers in the fourth quarter, and a record 43 million printers in the last 12 months.
HP, which slashed 2,400 positions last quarter, improved its outlook for the first quarter of the 2004 fiscal year. It expects revenue of at least $19.1 billion, up from $19 billion.
Wayman said an improving economy would likely mean bigger bonuses at HP, which employs 142,000 people.
HP introduced more than 100 new products this summer, including digital photography products, hand-held computers and desktop products aimed at consumers. It launched a line of high-volume copiers Tuesday to compete against Xerox Corp., Canon Inc. and Ricoh Co.
The company spent $3.6 billion on research and development in the quarter, down from the $3.9 billion it spent in the same quarter of 2002.
Wayman expressed concern that many of HP’s strongest sales gains were on low-margin consumer gadgets. Fiorina acknowledged in a conference call that HP still lagged Dell in hourly productivity, and big-spending corporate clients were still abstemious.
“It’s clear enterprises continue to be tight with the purse strings,” said Fiorina, who noted that layoffs would continue. “We’re not counting on a huge improvement in the enterprise space.”
Some Wall Street veterans sounded notes of caution this week about HP’s future. More than half of analysts polled by Zacks Investment Research Inc. give HP stock a “hold” rating.
“We think HP’s long-term fundamentals are still plagued by structural issues,” Ali Irani of CIBC World Markets Corp. wrote in a research report, citing HP’s “erratic” supply chain and its “over-reliance” on low-margin printers and ink. “With the company squeezed between the successful models of IBM and Dell, HP is still seen as a market share target.”
Shares of HP jumped 3 percent, or 69 cents, to close at $22.34 Wednesday on the New York Stock Exchange before the company released its results. The shares gained 33 cents in extended trading.