Hewlett-Packard Co, the world's biggest personal-computer maker, had a third-quarter loss of US$2.03 billion as job cuts and costs related to the US$18.9 billion purchase of Compaq Computer Corp increased expenses.
The net loss was US$0.67 a share, compared with net income of US$123 million, or US$0.06, a year earlier, the company said. Sales in the period ended July 31 rose to US$16.5 billion from US$10.3 billion. Year-ago figures don't include results from Compaq.
Excluding US$2.4 billion in acquisition costs, Hewlett-Packard met analysts' profit forecasts, sending shares higher. The company has cut 6,500 jobs of the planned 15,000 firings, and will reduce costs by US$500 million this year as forecast, Chief Financial Officer Bob Wayman said in an interview. The savings are improving profitability even as PC and server sales drop, investors said.
"They seem to be on track," said Sunil Reddy, a money manager and analyst with Fifth Third Bank, which owns about 1.2 million shares of Hewlett-Packard. "It's nothing to write home about, but it's all right." Hewlett-Packard's shares were trading at US$14.72 after the report. They fell US$0.64 to US$14.21 as of 4pm in New York Stock Exchange composite trading. The stock dropped 18 percent during the third quarter.
"Throughout the first 100 days, we kept our eye on the ball," Chief Executive Carly Fiorina said on a conference call.
Excluding restructuring and other acquisition costs, the Palo Alto, California-based company said it would have earned US$0.14 a share in the recent period, matching the average estimate of analysts surveyed by Thomson First Call. Sales fell short of the US$16.7 billion average forecast.
"Their revenue was a little shy of what people were looking for," said John Jacobs, president of Jacobs & Co, which held 122,892 Hewlett-Packard shares as of June.
"I'm surprised they are at US$0.14. By meeting it on less revenue, it shows that the cost benefit is there." The computer maker said profit excluding some costs in the quarter ending in October will be US$0.22 a share on sales of US$17.4 billion. The forecasts are in line with the average estimates in an analyst survey by First Call.
Dell Computer Corp, the world's second-largest PC maker, has been gaining PC market share since Hewlett-Packard bought Compaq, which made it No. 1 in the market. In the second quarter, Dell controlled 14.9 percent of the market worldwide, compared with Hewlett-Packard's 15.5 percent, according to Dataquest. Dell has said it plans to regain the top spot by year-end.
Investors have been hoping for a rebound in PC sales this year after the market declined last year for the first time since 1985.
Sales of PCs in the back-to-school season have been "more muted than usual," Capellas said today.
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