Hewlett-Packard Co Chief Executive Officer Carly Fiorina, who was scheduled yesterday to provide the computer maker's last quarterly earnings report without Compaq Computer Corp, has to prove the acquisition will boost sales, investors said. \n"She's got to hit the marks and everybody's going to be looking at them, because they've been in print enough times," said Bill Schaff, whose US$70 million Berger Information Technology Fund owns the stock. "I would not like to be in her shoes." \nAnalysts expect a rise in fiscal second-quarter profit to US$0.25 a share and a US$500 million decline in sales to US$11.1 billion, according to the average estimates in a Thomson First Call survey. Hewlett-Packard will have costs of as much as US$1.4 billion from the purchase, and the company won't say whether any of the expenses were taken in the past three months. \nChief Financial Officer Bob Wayman said in an interview last week he may give some "basic" targets for the combined company, with full forecasts coming next month. The stock has dropped 14 percent since the acquisition was announced Sept. 3 and has fallen 24 percent in the past year. \n"We know we have important execution challenges in front of us, but we are ready," Fiorina said at a press conference last week in Cupertino, California. \nFiorina closed the US$18.9 billion Compaq purchase May 3, after defeating an eight-month campaign against the transaction led by former director Walter Hewlett. \nPalo Alto, California-based Hewlett-Packard surpassed analyst forecasts in the past two quarters, after disappointing in 2000 and last year. Investors credit Fiorina with energizing workers to overcome the distracting acquisition struggle. \n"You've got to respect her willpower and her energy," said Bruce Garelick, an analyst with Loomis Sayles & Co, which manages US$60 billion and has been adding to its Hewlett-Packard stake. "They have some ammunition to get out of the blocks with a little bit of momentum." \nFiorina has said Compaq will help shore up sales of server computers and services and create a bigger rival to International Business Machines Corp (IBM). Net income in the year-ago quarter was US$0.16 a share on US$11.6 billion in sales. \nPersonal-computer sales fell for the first time in 15 years last year and then dropped 2.7 percent in the calendar first quarter, according to IDC. Sales of digital cameras and photo printers buoyed Hewlett-Packard's fiscal first-quarter results, and analysts said some of that strength continued in the recent period. \n"H-P's consumer business held up better than expected throughout much of the April quarter," Prudential Securities Inc analyst Kimberly Alexy wrote in a note to clients last week. \nSales of business PCs and servers that run Web sites and networks haven't been as strong. Server shipments worldwide rose just 0.6 percent in the calendar first quarter, with Hewlett-Packard's shipments dropping 13 percent, according to Dataquest. \n"These business segments could remain under pressure until we see signs of a sustainable recovery in corporate profits," Merrill Lynch analyst Steve Milunovich wrote last week. \nThat has raised concern that the economy won't rebound any time soon and that consumer spending will cave as the slump continues. There's no compelling reason for consumers to keep spending later this year, said David Webb, who helps manage US$2 billion at Shaker Investments Inc. \n"The cup being half empty is the more accurate assessment," said Webb, whose company doesn't Hewlett-Packard stock. \nIBM's first-quarter sales and profit trailed early forecasts and server sales sank 21 percent, and Fiorina has said her team is readying for the worst. Her targets for US$2.5 billion in cost savings and a 5 percent revenue loss after the Compaq purchase don't depend on an economic rebound. \n"The IT industry will never return to the heady days of 20 and 30 and 40 percent growth," Fiorina said last week. \nFiorina was paid US$1 million in salary and received no bonus in fiscal 2001, after getting a salary and bonus totaling US$2.77 million the previous year. She received stock options worth US$13.5 million. \nShe and her new No. 2, former Compaq CEO Michael Capellas, say the combination means rivals have to rethink their strategies. \nSales teams are handing customers three-year product outlines. Fiorina and Capellas have named the top three layers of management and are mapping out the fourth one now. They tout US$5.3 billion of new contracts signed in the 90 days before the close as proof that customer loyalty remains high. \nFiorina, who won Compaq as Walter Hewlett and other opponents threatened to replace her, may not be safe yet, investors said. \n"If the economy starts to recover and business picks up, all sins will be forgiven," Schaff said. "If we stay in this type of environment, she may not survive."
‘NO EQUILIBRIUM’: Taiwan’s increased defense spending is a good step, but it needs to do more to have the ability to deter aggression from China, a senior US official said The US plans to sell as many as seven major weapons systems — including mines, cruise missiles and drones — to Taiwan, four people familiar with the discussions said. Pursuing seven sales at once is a rare departure from years of precedent in which US military sales to Taiwan were spaced out and carefully calibrated to minimize tensions with Beijing. However, US President Donald Trump’s administration has this year become more aggressive with China, and the sales would land as relations between Beijing and Washington are at their lowest point in decades over accusations of spying, lingering trade tensions, disputes about the
CLOSE ENCOUNTERS: Several of the PLA fighter jets that crossed the median line of the Strait came within 68km of Hsinchu, drawing warnings from Taiwan, the ministry said At least 18 Chinese military aircraft yesterday flew into the nation’s air defense identification zone (ADIZ) on the second day of a US delegation’s visit, the Ministry of National Defense said, adding that the military responded by deploying an air defense missile system to monitor their activities. A delegation led by US Undersecretary of State for Economic Growth, Energy and the Environment Keith Krach on Thursday started a three-day visit to Taiwan. The ministry from Thursday started publicizing the actions of the Chinese People’s Liberation Army (PLA) in Taiwan’s ADIZ on its Web site and Twitter. According to ministry reports, 18 PLA aircraft
WORKING OVERTIME? NTU professor Lee Duu-jong denied that he had held a part-time position at a Chinese university or joined China’s Thousand Talents Program A candidate for the post of National Taiwan University of Science and Technology (NTUST) president yesterday dropped out of the race following a report questioning his links to Chinese academia and government programs. Lee Duu-jong (李篤中), a professor at National Taiwan University’s (NTU) chemical engineering department, was a member of China’s Changjiang Scholars’ Program in 2006 and was on the list of its Thousand Talents Program in 2017, a report by Chinese-language Mirror Media magazine said yesterday. The article said that Lee is suspected of having held a part-time job at the Harbin Institute of Technology in China and was the recipient
TWO CASES: The five allegedly conspired with conglomerates, threatening the nation’s governance and subverting the rules of ethical conduct, a deputy chief prosecutor said Taipei prosecutors yesterday charged three legislators and one former lawmaker with contravening the Anti-Corruption Act (貪污治罪條例) in a case linked to former Pacific Distribution Investment Co (太平洋流通) chairman Lee Heng-lung’s (李恆隆) battle with the Far Eastern Group (遠東集團) over ownership of the Pacific SOGO Department Store (太平洋崇光百貨) chain, while independent Legislator Chao Cheng-yu (趙正宇) was indicted in a separate case involving two funeral services companies and a plot of land in a national park. Chinese Nationalist Party (KMT) legislators Chen Chao-ming (陳超明) and Sufin Siluko (廖國棟), Democratic Progressive Party (DPP) Legislator Su Chen-ching (蘇震清) and former New Power Party legislator