Hewlett-Packard Beats Expectations

Thursday, August 17th 2000, 12:00 am
By: News On 6

PALO ALTO, Calif. (AP) — Hewlett-Packard Co. reported a 23 percent increase in its third-quarter profit, easily beating Wall Street expectations as home PCs and notebook sales increased despite an overall sluggish market.

The Palo Alto-based maker of computers, printers and imaging products, earned $1.05 billion, or $1.01 per share, in the three months ended July 31. That was up from a profit of $853 million, or 81 cents a diluted share, in the year-ago quarter.

Excluding investment gains, the company on Wednesday reported earnings of 97 cents per share. Analysts by First Call/Thomson Financial estimated the company would earn 85 cents a share.

Hewlett-Packard's revenue for the quarter grew 15 percent to $11.8 billion from $10.3 billion.

Despite the results, shares of Hewlett-Packard were down $10.312 to $109.688 in early trading on the New York Stock Exchange.

``Last year at this time, we committed to becoming a more aggressive and focused HP, delivering strong top- and bottom-line growth on a consistent basis,'' said Carly Fiorina, HP president and chief executive officer.

HP reported revenue from home PC sales grew by 62 percent in the quarter. Notebook revenues grew by 93 percent.

``We've only been in the notebook business for a year and we're already No. 5,'' Fiorina said. ``And we're moving up.''

HP also has been aggressively expanding into e-commerce and information technology services, hiring 600 new IT consultants in the past quarter alone.

That strategy will continue, Fiorina said.

A 12 percent year-over-year increase in revenue in the company's server and storage network business — driven by the growing popularity of digital photography and digital music — also contributed to the company's positive quarterly results.

Revenue from Unix servers alone was up 13 percent from the year-ago period, the company reported.

While HP has succeeded in broadening its market share, analysts say the company still faces stiff competition from International Business Machines Corp., Sun Microsystems Inc. and Compaq Computer Corp.

Revenue ``could have been better'' in the infrastructure arena, which includes computer servers and data storage, said Brian Richardson, an analyst with Meta Group in New York. However, he said, ``I think they're in a good position in a very tough, competitive environment.''

The company also announced that its board of directors has approved a 2-for-1 stock split in the form of a stock dividend. Share and per-share amounts have not been adjusted to reflect this split.