HWP Blow-out earning & Stock Split
Naturally it's trading down!
UPDATE 3-Hewlett-Packard Q3 earnings (from MSN)
August 16, 2000 05:37 PM Eastern Time
(Please correct fourth paragraph to show company had revenues of $11.82 billion, up from $10.32 billion last year).
By Andrea Orr
PALO ALTO, Calif., Aug 16 (Reuters) - Hewlett-Packard Co. HWP Wednesday said its third-quarter earnings easily surpassed analyst forecasts, reflecting strong revenue growth in most of its key product areas and a continued strict attention to cost management.
The company also said it would split its stock two-for-one as a sign of confidence in its ability to extend its growth while taking advantage of vast opportunities to provide the Internet's underlying infrastructure.
The company said it earned $1.03 billion, or 99 cents per diluted share from continuing operations, compared with $696 million, or 66 cents per share in the year-ago period.
Most analysts had been forecasting earnings of 85 cents per share, according to First Call/Thompson Financial, which tracks forecasts. Revenues totalled $11.82 billion, up from $10.32 billion last year. (corrects numbers).
The company's shares shot up in after-hours trade following the earnings report. The stock, which had closed the regular session up 1-7/16 to 111-7/16 was, was quoted above 120 after hours. However, it remains well below its 52-week high of 156.
"We posted what I would characterise as superb results," Hewlett-Packard Chief Executive Carly Fiorina said in a conference call with analysts after the results came out. "We had a great quarter, we made truly remarkable strides."
She said some of the highlights of the quarter included a 62-percent increase in revenues in its home PC business, and a 93-percent increase in notebook PC revenues. The company's printer business stood to thrive, she said, as the market shifted from monochrome to colour printers.
Fiorina also spent considerable time addressing the broader strategy she has implemented to relentlessly pursue new Internet business, while disposing of assets that don't fit.
"We're on target with our vision of a world where literally everything is connected," she said. "That all is supported by an Internet infrastructure that is always on."
Fiorina also said that Hewlett-Packard, which has recently disposed of some non-core assets, would continue to divest businesses outside of its core areas of focus. She said it would likely announce the divestuture of some specialised software assets in the near future.
Industry analysts generaly applauded the company's performance, but during the conference call returned repeatedly to to the Unix server business, whose growth rate that was smaller than several other business segments.
While Hewlett-Packard achieved strong growth in its low-end servers, it said mid-range server sales were flat, and sales of its high-end servers were down. It attributed the decline to the upcoming launch of the high-end SuperDome server, which will be significantly faster than its existing product.
"It was the high-end where we had issues, which were predicted based on what was going on with SuperDome," Fiorina said.
Salomon Smith Barney analyst John Jones said he found it hard to quibble with the overall results, but suggested some industry analysts might use the weak server sales to put a more negative spin on the report.
"There are some analysts who are going to argue the glass is half full," said Jones. His own prediction is that the company will be able to recapture much of the high-end server business after the September launch of Superdome, which he said would be at least twice as fast as Sun Microsystems Inc'sSUNW fastest server. "It ought to do very well," he said.
During its discussion of results, Hewlett-Packard also cited a couple of areas of concern including a slowdown in monochrome laser printer sales as colour printers became more popular, and a shortage of DRAM chips which could increase its costs of buying computer equipment.
Hewlett-Packard's operating income excludes gains from discontinued operations. Including all the unusual items, it had a net profit of $1.05 billion or $1.01 per diluted share, compared with $853 million or 81 cents per diluted share last year. |
