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Fri, Nov 21, 2003 - Page 12 News List

Hewlett-Packard's quarterly earnings beat expectations


Hewlett-Packard Co's fourth-quarter earnings inched past Wall Street estimates Wednesday as the computer giant reported strong sales in its traditional printing market, but executives remained cautious about growth next year.

For the three months to Oct. 31, Palo Alto-based HP earned US$862 million, or US$0.28 per share, compared with US$390 million, or US$0.13 per share, in the same period last year.

Excluding special items, HP earned US$1.1 billion, or US$0.36 per share. That compares with US$721 million, or US$0.24 per share, in the same period last year.

Fourth-quarter revenue was US$19.85 billion, up 10 percent from US$18.05 billion in the fourth quarter of last year.

Analysts were expecting HP to earn US$0.35 per share on revenue of US$19 billion, according to a survey by Thomson First Call.

"HP's excellent fourth-quarter performance capped a fiscal year in which we delivered on our commitments," said Carly Fiorina, HP's chairman and chief executive. "We grew revenue and market share. We exceeded our integration and cost saving goals ahead of schedule."

All five of HP's business divisions were profitable in the quarter -- the first time since the US$19 billion acquisition of Compaq Computer Corp 18 months ago.

Chief financial officer Bob Wayman said the fourth quarter marked the last time HP would break out integration expenses as special items.

The company's efforts to steal corporate clients from IBM Corp and Dell Inc faltered earlier this year. But strong server sales brought HP's "enterprise systems" division a fourth-quarter operating profit of US$106 million, compared with a US$129 million loss in the same period last year.

HP's "imaging and printing" division posted its first operating profit exceeding US$1 billion. The company shipped nearly 13 million printers in the fourth quarter, and a record 43 million printers in the last 12 months.

HP, which slashed 2,400 positions last quarter, improved its outlook for the first quarter of the 2004 fiscal year.

It expects revenue of at least US$19.1 billion, up from US$19 billion.

HP introduced more than 100 new products this summer, including digital photography products, hand-held computers and desktop products aimed at consumers.

It launched a line of high-volume copiers Tuesday to compete against Xerox Corp, Canon Inc and Ricoh Co.

The company spent US$3.6 billion on research and development in the quarter, down from the US$3.9 billion it spent in the same quarter of last year.

Wayman expressed concern that many of HP's strongest sales gains were on low-margin consumer gadgets.

Fiorina acknowledged in a conference call that HP still lagged Dell in hourly productivity, and big-spending corporate clients were still abstemious.

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