HP profits increase 34pc, improves H2 outlook

19 May 2004

HP has reported a 34pc increase in profits for the second quarter of US$884m, compared with US$659m a year ago, and improved its outlook for the second half of this year. However, analysts have maintained a cautious outlook in terms of how the computer giant will withstand competition from rivals.

Excluding special items, such as a US$105m reimbursement to the Canadian government over a consulting contract dispute, HP earned US$1.03bn, or 34 cents per share. That compared with US$877m, or 29 cents per share, in the same period a year earlier.

Second-quarter revenue was a record US$20.1bn, up 12pc from US$18bn in the second quarter of 2003.

Because of the flagging value of the US dollar, sales in Europe surged 17pc to US$8.3bn as consumers took advantage of relatively inexpensive digital cameras, digital music players, laptops and other gear. Excluding the effects of currency fluctuations, revenue increased only 4pc.

HP, which employs about 145,600 people worldwide, boosted its outlook for the second half of 2004. Earlier this year, the company told analysts to expect sales of US$39.7bn, but said last night said that second-half revenue could hit US$40.7bn.

Carly Fiorina, HP chairman and chief executive officer (pictured), commented: “HP delivered a strong quarter with solid revenue gains and continued profitability across the portfolio. We surpassed US$20bn in quarterly revenue for the first time in our history, with record second quarter revenue in PCs, enterprise hardware, software, services and imaging and printing. Cash flow from operations totaled US$2.6bn. These results demonstrate that we are winning and growing across the portfolio in an intensely competitive market.”

HP earned US$650m in the second quarter from corporate customers looking to outsource computer work, such as maintaining databases and powering e-commerce sites, up 50pc from the second quarter last year, although Fiorina said the pace of growth in outsourcing will likely slow later this year.

By John Kennedy