HP Earnings Soar, Beat Expectations
SAN JOSE, Calif., Feb 13, 2002 (AP Online via COMTEX) -- First-quarter profits
at Hewlett-Packard Co. more than tripled on strong computer and printer sales.
The results, reported Wednesday, exceeded analysts' recently raised forecasts.
The report figured to give the company a dose of good news as it tries to rally
support for its $22.6 billion purchase of Compaq Computer Corp. against intense
opposition from dissident director Walter Hewlett.
In the three-month period ending Jan. 31, HP reported net income of $484
million, or 25 cents per share, compared to $141 million, or 7 cents per share,
in the year-ago quarter.
Revenue dropped 8 percent to $11.4 billion.
Excluding acquisition-related charges, HP said it earned $564 million, or 29
cents per share, down from $812 million, or 41 cents per share, a year ago.
Analysts were expecting earnings excluding charges of 25 cents per share,
according to Thomson Financial/First Call. The estimate had been 16 cents until
last week, when HP said consumer demand for printers and computers had been
surprisingly strong.
HP shares rose 21 cents, or 1 percent, to close at $20.98 on the New York Stock
Exchange in advance of the earnings report, and were unchanged early in the
extended session. Compaq gained 28 cents, 2.5 percent, to close at $11.40 and
was slightly higher in after-hours trading.
HP said its outlook for the rest of the year remains cloudly because of
unpredictable market conditions and weak spending on technology by businesses.
Second-quarter revenue is expected to be down modestly from the first quarter,
with margins and expenses about flat.
Even the impending earnings report didn't quiet the infighting over the Compaq
acquisition Wednesday, as six HP directors accused Walter Hewlett of going too
far in his criticism of CEO Carly Fiorina.
Hewlett, the son of an HP co-founder who is leading the campaign against the
deal, threw some punches too. He ran a full-page newspaper ad that said complex
technology mergers never work out and that HP is overpaying for Compaq.
Both sides are campaigning hard for investor support as the March 19 vote by HP
shareholders draws closer. Hewlett and Packard family interests with 18 percent
of the company's stock say they will reject the deal.
In a letter sent Wednesday to Hewlett, HP's board - with the exception of
Hewlett, Fiorina and chief financial officer Bob Wayman - took "serious issue"
with Hewlett's recent attacks.
The letter said Hewlett has mischaracterized the amount of time HP spent
formulating its long-term strategy before the Palo Alto-based company decided to
buy Houston-based Compaq. It also said he has suggested falsely that the board
has just rubber-stamped Fiorina's decisions.
"You have insulted our personal commitment and fiduciary responsibility which
each of us take very seriously," the letter said.
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On the Net:
hp.com
Pro-merger site: votethehpway.com
Anti-merger site: votenohpcompaq.com
By BRIAN BERGSTEIN
AP Business Writer
Copyright 2002 Associated Press, All rights reserved
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APO Priority=u
APO Category=1700
KEYWORD: SAN JOSE, Calif.
SUBJECT CODE: 1700
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