Lucinos... Expect DELL to do the same... Face it --- a CPQ only problem that EP did not recognize,,, must have spent too much time away counting on information from those that knew as little as he did as to what was going on... I would like to hear HIS explainations ...
Monday May 17, 8:11 pm Eastern Time
FOCUS-H-P Q2 profits surged on
strong PC sales
(New throughout, recasts lead, adds additional analyst, executive
comments from conference call)
By Duncan Martell
PALO ALTO, Calif., May 17 (Reuters) - Hewlett-Packard Co.'s
(NYSE:HWP - news) fiscal second-quarter results easily topped
analysts' forecasts, as strong personal computer and printer sales boosted profits 34 percent at the
No. 2 computer maker.
The company also said revenue in the second half of its fiscal year could rise 10 percent to 13
percent from a year earlier, sending shares higher in after-hours trading.
Hewlett-Packard said its net income in the three months ended April 30 rose to $918 million, or 88
cents a share, from $685 million, or 65 cents, a year ago. Analysts had expected per-share results of
80 cents, according to First Call Corp., which tracks company earnings.
Revenue rose 3.1 percent to $12.4 billion from $12.04 billion a year ago, in line with some of the
more aggressive forecasts from analysts.
Revenue from computer products improved substantially from a year ago, when Hewlett-Packard
was hurt by falling prices and stiff competition.
Commercial and consumer PC lines helped boost growth overall while server computers, laptops
and its home PC line all were particularly strong, the company said.
''We think we can continue to grow at one and a half to two times the market (growth rate) in PCs,''
said Bob Wayman, the company's chief financial officer, on a conference call.
Hewlett-Packard stock rose $1.88 to $86.19 on the New York Stock Exchange. After hours, the
stock rose as high as a record $88.63, according to Instinet.
The results marked the strongest growth in orders in four quarters and could be a tentative indication
that Hewlett-Packard is succeeding in its pledge to smooth out its performance and deliver strong
results in most of its businesses.
In recent quarters, because of Hewlett-Packard's breadth, one thing or another has marred results,
whether it was Asia or weakness in commercial PCs or its test and measurement business.
''This is probably the cleanest quarter they have put up in the last three or so,'' said analyst Dan
Niles at BancBoston Robertson Stephens in San Francisco. Excluding a $30 million gain, which
Niles said amounted to 2 cents a share, Hewlett-Packard earned 86 cents a share.
Orders for everything from printers to PCs to measurement devices rose an improved 9.7 percent,
though Chief Executive Lewis Platt said in a statement that the Palo Alto, Calif.-based company's
challenge now was ''to convert order growth into stronger growth in revenue.''
Revenue from Hewlett-Packard's computer and imaging business rose 4 percent to $10.5 billion,
ahead of the company's intent to split its computer and measurements activities into separate
businesses, a plan announced March 2.
Because PCs account for about a quarter of sales, those results could help calm persistent jitters that
the PC market is slowing down, analysts noted. Hewlett-Packard does not provide separate figures
for personal computer sales.
''They're doing very well in PCs,'' said analyst Steven Dube of Wasserstein Perella Securities.
No. 1 computer maker International Business Machines Corp. (NYSE:IBM - news) saw its PC
business come roaring back in the first quarter, as PC sales surged 50 percent to $3.6 billion.
Two of the largest technology research firms, Dataquest and International Data Corp., said late last
month that shipments worldwide of PCs rose a better-than-expected 17 percent to 19 percent in
Asia. A recovery in Asia and robust consumer PC sales paced the gains.
On the conference call, Hewlett-Packard executives said because of outside consulting and legal
fees, as well as slightly increased hiring associated with its split into two firms, costs will rise and
''have an impact'' on third-quarter earnings.
In its printer business, Hewlett-Packard said its market share in the inkjet business ''increased
noticeably around the world.'' Both the laser printer and inkjet lines posted ''solid'' revenue growth.
Hewlett-Packard's printer business, the world's largest, accounts for about a third of overall sales.
Orders in the company's measurement business rose 14 percent from a year ago, with all major
businesses and geographic areas posting very good order increases.
''It feels like the turn was meaningful,'' said analyst John Jones at Salomon Smith Barney. ''The
commercial PC business was better and servers and notebooks were pretty positive.''
Hewlett-Packard executives said revenue growth in the second half of the year will likely be fueled
by a continuing rebound in Asia, where its measurement business is strong, and by robust sales of
two types of powerful computers, the V-Class and N-Class servers.
The company said it could not ship enough V-Class machines to meet demand, and added that the
N-Class will be widely available in the next several weeks.
''This isn't a blow-out quarter,'' analyst Niles said. ''But in general we own stocks for the outlook
and the outlook is pretty good.'' |
