H-P Posts 4th-Quarter Earnings In Line With Warnings; Revenue Up 11%NOV 17,1999
NEW YORK -(Dow Jones)- Hewlett Packard Co. late Wednesday reported fiscal
fourth-quarter earnings that were in line with warnings it issued last month
because of disappointing server sales and component shortages stemming from the
September earthquake in Taiwan.
H-P (HWP) said net income came to $760 million, or 73 cents a share on a
fully diluted basis, compared with $710 million, or 68 cents a diluted share,
in the year-earlier period. Revenue increased 11% to $11.4 billion.
The mean estimate of analysts surveyed by First Call/Thomson Financial was
for earnings of 73 cents a share. Before H-P's Oct. 1 warning, analysts had
been looking for the Palo Alto, Calif., computer and printer maker to post
earnings of 99 cents a share.
H-P said results include expenses of two cents a share related to the
spin-off of Agilent Technologies Inc. Excluding items, H-P said it would have
earned 75 cents a share.
H-P is preparing to spin off its test and measurement business, Agilent, in
a $1.1 billion initial public offering Thursday. H-P plans to sell about a 13%
stake in the company in the offering, divesting itself of the remaining Agilent
shares by the middle of 2000 by distributing them directly to shareholders.
Agilent had fourth-quarter earnings of $146 million, compared with a year-ago
net loss of $51 million. Revenue increased 23% to $2.4 billion.
H-P's new chief executive, Carly Fiorina, in October warned that the
company's revenue growth was likely to come in at the low end of an expected
range of 7% to 10%, saying results would reflect weak North American enterprise
sales of Unix system servers, the powerful network computers that store company
data and software. The executive vowed to reorganize the server sales force in
the U.S., saying both the culture and the incentive program of the group needed
to be fixed.
Wednesday, Fiorina said H-P "executed solidly despite this quarter's
challenges. We have an aggressive agenda for change, and we're making good
progress on it. At the same time, we're managing our change and maintaining
good operational controls over our businesses."
Fiorina said the company has "some long-standing business issues" to address
but is "taking decisive action."
Looking forward, Fiorina said the company's objective in the new year is "to
provide consistent and profitable revenue growth across the company." She said
she is challenging her staff to "achieve top- and bottom-line growth in the
range of 12 to 15%, with momentum building through the year."
As expected, imaging and printing revenue showed healthy increases, buoyed
by robust sales of laser and inkjet printers.
Monday, Fiorina announced that the computer maker will relaunch its brand,
adopt a new logo and begin a $200 million advertising campaign as part of her
effort to revitalize the company.
Fiorina took the helm at H-P in July when Chairman Lewis E. Platt stepped
down as president and CEO, saying he would retired by the end of the year after
33 years with H-P. Platt this week was tapped as CEO of Kendall-Jackson Wine
Estates Ltd.
Fiorina, who came to H-P from Lucent Technologies Inc. (LU), is rushing to
to make her mark on the printer and computer maker. One of her priorities is
revitalizing the server business, where the company has long been overshadowed
by competitors such as Sun Microsystems Inc. (SUNW) and International Business
Machines Corp. (IBM).
While server sales are healthy overseas, they are stagnant in the U.S.,
leading Fiorina to announce a sales-force shake-up that has already affected
roughly 250 employees who have been fired or reassigned in the organization.
Fiorina's other recent moves include merging H-P's four product divisions
into a single group focused on computing and a single group focused on
printing, freeing two top executives to focus on H-P's biggest customers and
its corporate brand. Copyright (c) 1999 Dow Jones & Company, Inc.
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