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Thu, Nov 18, 2004 - Page 12 News List

Record revenues hike HP's profits

NY TIMES NEWS SERVICE , NEW YORK

The Hewlett-Packard Co said on Tuesday that its profits rose 27 percent in the fourth quarter as revenues reached record levels across its business lines.

The results signaled a turnaround for a company that stunned investors in August when it missed earnings and revenue forecasts for the third quarter.

"Despite the challenges of the third quarter, we made solid progress on many fronts," said chief executive Carly Fiorina in a conference call with analysts.

Fiorina said the company had solved the product supply and software problems that caused the shortfall it disclosed in August.

Last quarter, the company attributed the shortfall to weakness in its enterprise storage and server division, which sells equipment to corporations and government. Executives said there were problems with Hewlett's sales force in Europe and trouble with the installation of new order-taking software.

Fiorina called the unit's performance "clearly unacceptable," fired three top executives and vowed to get the business back on track by the fourth quarter.

HP's net income rose to US$1.09 billion, or US$0.37 a share, from US$862 million, or US$0.28 a share, in the period a year ago. Revenue rose 8 percent, to US$21.4 billion, from US$19.9 billion a year earlier. HP's sales for the year were US$79.9 billion, up 9.3 percent from last year's US$73.1 billion.

For the fourth quarter, the enterprise storage and server division posted a profit of US$107 million, in contrast to a loss of US$208 million in the third quarter.

Excluding special items, HP said it earned US$0.41 a share in the fourth quarter, beating its own lowered forecast. In August, it said earnings would be about US$0.35 to US$0.39 a share. Analysts surveyed by Thomson First Call estimated HP would report net income of US$0.37 a share on US$21 billion in revenue for the fourth quarter.

Fiorina said the company had strong growth in its printer business, where it is the worldwide market leader. HP has also managed to become the second-biggest seller of hard-drive-based portable music players this year.

HP predicted that its revenue for the first half of fiscal 2005 would be US$41.8 billion to US$42.3 billion. Earnings per share will be about US$0.72 to US$0.74.

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