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Thu, Feb 27, 2003 - Page 12 News List

Hewlett-Packard's shares decline on missed forecasts

BLOOMBERG , PALO ALTO, CALIFORNIA

Hewlett-Packard Co, the world's No. 2 computer maker, said first-quarter earnings increased 49 percent on cost cuts. Sales missed analysts' forecasts, send-ing its shares down as much as 4.8 percent.

Net income rose to US$721 million, or US$0.24 a share, from US$484 million, or US$0.25, a year earlier. Sales in the quarter ended Jan. 31 gained 57 percent to US$17.9 billion. The year-earlier results exclude Compaq Computer Corp, acquired in May.

Sales lagged targets as demand in the US sagged and corporate clients trimmed spending, Chief Executive Carly Fiorina said on a conference call. Server unit sales fell 6.5 percent from the fourth quarter, and services revenue dropped 3.4 percent.

"I would have liked to have seen a better top line," said Jason Maxwell, research director at TCW Group Inc, which owns 1.55 million Hewlett-Packard shares and manages US$80 billion. "The only thing they cannot massage is revenue."

Sales trailed the US$18.5 billion Thomson First Call forecast.

Hewlett-Packard said profit before some costs would have been US$0.29 a share. On that basis, which doesn't conform to generally accepted accounting principles, profit topped the US$0.28 estimate in a First Call analyst survey.

The shares of Palo Alto, California-based Hewlett-Packard fell as much as 4.8 percent to US$17.30 in extended trading after the report. They were down 3.8 percent in after-hours trading as of 1:30pm Tokyo time.

The stock gained US$0.43 to US$18.18 as of 4pm on the New York Stock Exchange.

International Business Machines Corp is the world's biggest computer maker.

Hewlett-Packard is maintaining a December forecast that revenue will grow 2 percent to 4 percent this year from the US$72.3 billion brought in by the combined companies last year, Fiorina said on a conference call. Analysts had expected US$73.5 billion this year, First Call said.

"Two to 4 percent is not beyond the realm of possibility," Fiorina said. "On the other hand, it's very difficult."

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