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Mixed Results for HP
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Hewlett-Packard
By Rick Aristotle Munarriz (TMF Edible)
February 26, 2003
Earnings are like a box of chocolates. Sometimes they're a little nutty. Tech bellwether Hewlett-Packard (NYSE: HPQ) posted first-quarter results that gave optimists something to cheer about, with ample "boo, hiss" room for naysayers.
Earning $0.24 a share on $17.9 billion in revenue covered both spectrums of prognostication.
HP missed top-line targets but lapped past bottom-line estimates. What does that mean? Spending on information technology continues to be a real burden for the tech sector, but by squeezing more juice out of every revenue dollar, HP's better-than-expected margins seem to vindicate its controversial merger with Compaq.
Well, sort of. While four of the company's five business segments contributed to the bottom line, it was HP's original bread and butter -- printing and imaging products -- that earned the lion's share of operating profits. Critics of the merger can argue HP would've been much happier as a swinging single, as its printing stronghold accounted for nearly three-quarters of the operating profits on less than one-third of the quarter's revenue.
But let's raise a contrarian glass to toast the union. Sure, Compaq was troubled when it said, "I do," but it's just a matter of when -- not if -- the personal computer industry comes back into favor.
In the meantime, it wasn't the PCs that bled during the quarter. That distinction goes to HP's enterprise division, which will actually bounce back the strongest when the economy improves and corporations load up on servers and other technology.
The market may be shaking its head at how HP failed to live up to Wall Street's revenue hype, but it should also commend the company for achieving its goal to consolidate overhead.
Imagine that? A wedding couple that actually slimmed down during the first year of matrimony. Now, about that box of chocolates.... |
