HP back in the black

21 Nov 2002

Hewlett-Packard (HP) has buoyed the markets with a strong set of fourth quarter results. For the three months ending 31 October, the company posted a profit of US$390m on sales of US$18bn.

That compares with a loss of US$505m on revenue of US$18.2bn for the fourth quarter of 2001, when the results of HP and Compaq Computer are combined.

Excluding US$331m in restructuring and other charges, HP earned US$721m, or 24 cents per share, compared with US$238m, or eight cents per share in the same quarter last year.

“HP’s revenue grew sequentially in every business and in every region,” CEO, Carly Fiorina reported. “Operating profit improved sequentially in Enterprise Systems, Personal Systems, HP Services, and Imaging and Printing. Cost structure improvements are helping us compete more aggressively, improve our market position and grow top-line revenues. HP also generated US$1.5bn in cash from operations in the quarter.”

The company said, however, that it plans to cut 1,100 more jobs than it had recently announced. This will bring the total number of job losses to 17,900 by the end of the fiscal year 2003. The new job reductions will be achieved through a voluntary redundancy programme, mainly in Japan, HP said in a statement.

“We’re cutting costs, boosting productivity, delivering more for our customers and shareowners and investing in the future. Our strategy is working and we’re picking up momentum,” Fiorina said in a statement.

Although HP is sticking to its performance estimates for the current quarter, she predicted that there would not be any significant growth in technology spending during that period.

As one of the world’s largest IT companies, HP is seen as a bellwether for the tech sector. Its profile has increased markedly since Fiorina’s appointment and its merger with Compaq. The company was back in the news again last week when president Michael Capellas announced he was leaving the company. He has since been appointed CEO of beleaguered telecoms giant WorldCom.

By Brian Skelly