• banner-01-26-17b
  • 2toner1-2
  • clover-depot-intl-us-ca-email-signature-05-10-2017-902x1772
  • ncc-banner-902-x-177-june-2017
  • ces_web_banner_toner_news_902x1776
  • mse-big-banner-new-03-17-2016-416716a-tonernews-web-banner-mse-212
  • cartridgewebsite-com-big-banner-02-09-07-2016
  • 4toner4
  • 05 02 2016 429716a-cig-clearchoice-banner-902x177
  • Print


 user 2005-05-24 at 12:57:00 pm Views: 71
  • #9831

    HP Boosts Earnings but Lowers Expectations

    (May 05) – Hewlett-Packard Co. reported a slight boost in
    quarterly earnings, inching past Wall Street’s expectations, but the company’s
    new leader lowered expectations for the current quarter and acknowledged that
    “overall performance leaves room for improvement.”

    For the three months ended April 30, Palo Alto-based HP
    reported a profit of $966 million, or 33 cents per share, up 9 percent from $884
    million, or 29 cents per share, in the second fiscal quarter of 2004.

    Excluding special items, such as $177 million in buyouts
    and other work force reduction expenses, HP would have earned $1.07 billion, or
    37 cents per share, up 4 percent from $1.03 billion, or 34 cents per share, in
    the same period a year earlier.

    Quarterly revenue was $21.6 billion, up 7 percent from
    $20.1 billion in the same quarter a year ago. If adjusted for the declining
    value of the dollar, HP sales would have grown only 4 percent.

    HP’s quarterly results were 1 cent ahead of expectations of
    analysts polled by Thomson Financial, who forecast 36 cents per share on sales
    of nearly $21.4 billion.

    “HP had a solid quarter,” said Mark Hurd, whom the board
    named chief executive and president in March. “Nevertheless, our overall
    performance leaves room for improvement in many of our businesses. We expect to
    provide details as soon as our plans are finalized that will move us toward that

    HP shares rose 54 cents, or 2.6 percent, to close at $21.55
    before the earnings report was released Tuesday afternoon, just below a 52-week
    high of $22.26. The stock added another 3.5 percent, or 75 cents, in extended

    HP slashed research and development costs to $890 million
    in the second quarter, from $924 million in the same quarter of 2004 — a risky
    move for any company in the fiercely competitive technology sector.

    HP has been downsizing for more than three years, and it
    spearheaded a companywide wage review May 1, its first in two years. About 1,900
    employees took advantage of a voluntary severance program in the last

    Hurd, who on Tuesday characterized HP’s cost structure as
    “off-benchmark,” appears to be escalating a cost-cutting campaign that earned
    former Chairman and CEO Carly Fiorina the moniker “Chainsaw Carly” throughout
    Silicon Valley. HP, which employs about 150,000 people worldwide, expects to
    spend $100 million to reduce its work force in the current quarter.

    Work force reduction expenses, among others, prompted
    executives to lower fiscal third-quarter revenue to the range of $20.3 billion
    to $20.7 billion, with earnings per share of 29 cents to 31 cents. Analysts were
    expecting HP sales of about $20.4 billion and per-share earnings of 32

    But some analysts said the lowered guidance may be little
    more than expectations management. Hurd was known for providing conservative
    financial estimates when he was president and chief executive at NCR Corp.,
    Dayton, Ohio-based computer services company.

    “There is considerable sentiment that HP may attempt to
    lower expectations presumably so that they can then be exceeded, which some
    believe to have been Hurd’s approach when he was at the helm of NCR,” said
    analyst Mark Stahlman of Caris & Co.

    Tuesday’s earnings announcement caps several tumultuous
    quarters for HP, which in February fired Fiorina for failing to slash costs and
    boost sales quickly enough.

    Throughout 2004, Fiorina became the target of intensifying
    criticism for her ambitious diversification strategy. Through the 2002
    acquisition of Compaq Computer Corp., she attempted to change HP from a bloated
    company that focused on printers and ink into a Silicon Valley consulting and
    computing powerhouse.

    Despite her efforts, ink and printers still drive revenue.
    The “imaging” division reported fiscal second-quarter sales of $6.4 billion, up
    5 percent from the same period of 2004. Shipments of color laser printers grew
    96 percent.

    By contrast, HP’s software division reported an operating
    loss of $6 million on revenue of $277 million. In the year-ago period, the
    division lost $52 million.

    “We’re not closing enough deals in the field,” Hurd said of
    software sales. “We’re aware what needs to be done and we’re intent on applying
    the appropriate amount of rigor to do that.”

    Many analysts have expressed concern about HP’s prospects,
    and they worry that Hurd will spend too long analyzing operations before
    implementing strategies that boost profits. In April, the company canceled one
    of its two meetings per year with financial analysts, and it still hasn’t
    announced a new date.

    But Hurd, who spent the past month meeting with thousands
    of employees and all of HP’s largest customers, said he wouldn’t rush his
    analysis and development of new strategies. He said he needed more time getting
    “beneath the operations.”

    “It would be premature to discuss operational plans,” Hurd
    said. “But what’s clear to me is that hard work lies ahead of us. The reality is
    that there’s no quick fix.”