Toner News Mobile › Forums › Latest Industry News › *NEWS*TAX PAYMENTS HIT HP’S BOTTOM LINE
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AnonymousInactiveTax payments hit HP’s bottom line
August 2005
A once-off tax payment of
USD960 obscured a 40 percent jump in profits at Hewlett-Packard, as the
company squeezed more from its PC business.The California-based technology and imaging giant had revenues of
US20.8 billion for the three months to the end of July, up 10 percent
since the corresponding quarter in 2004. Operating profits reached
USD913 million, up nearly 40 percent.But because of a huge once-off tax payment of USD960 million, the
company had net profits of only USD73 million with per share earnings
of USD0.03. This compared to USD586 million in profits for the
corresponding quarter a year earlier, when the company had per share
earnings of USD0.19.The USD960 million tax charge was incurred as a result of the company’s
decision to send USD14.5 billion of its international earnings back to
the US, taking advantage of a once-off tax break under the American
Jobs Creation Act. The repatriation is the biggest yet by an American
technology firm and follows IBM’s decision to repatriate USD9 billion.“We executed well in the third quarter with double-digit revenue
growth, solid margin improvements in key segments and strong cash
flow,” said Mark Hurd, HP’s CEO in a statement. “I’m encouraged by what
we have achieved to date, and we are focused on driving further
performance improvements.”Revenues at Hewlett-Packard’s PC manufacturing operation grew 8 percent
to USD6.4 billion and the division’s profitability grew seven-fold to
USD163 million. Profits slipped in the printer division due to more
aggressive pricing, even as revenues increased 5 percent.Meanwhile, revenues grew 20 percent at HP’s server division, where the
company had profits of USD150 million, reversing a year-on-year loss of
USD211 million. Revenues in the services group grew 10 percent and in
the software group, revenues grew 11 percent. However, the software
division is still running a loss in excess of USD40 million.The company said that the first phase of its plan to lay off 14,500
workers — or 10 percent of its workforce — is coming to an end, with
the completion of a voluntary redundancy programme in the US. The
company said that it has initiated discussion with European work
councils about job cuts in its international operations.HP employs 4,000 people in Ireland, 1,800 of whom work in an ink-jet
manufacturing operation in Leixlip, County Kildare. It also employs
more than 2,200 people in a software services operation in Dublin and a
software development operation in Galway. There have been no reports of
planned job losses in any of HP’s Irish operation -
AuthorAugust 19, 2005 at 8:35 AM
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