HP Misses Q4 Expectations, Drops PwC Plans

Hewlett-Packard badly missed expectations for its fourth fiscal quarter, and has decided against acquiring PricewaterhouseCoopers' consulting business.

HP reported net income of $US922 million, or 41 cents per share excluding one-time items, for the quarter ended Oct. 31, 2000. The consensus from fourteen analysts polled by First Call/Thomson Financial was that the company would post earnings of 52 cents per share.

Including one-time items, the company achieved earnings of 45 cents per share. This compares with earnings of 36 cents per share and net income of $US760 million in the year-ago fourth quarter.

"We are ... very disappointed that we missed our EPS growth target this quarter due to the confluence of a number of issues ... . I accept full responsibility for the shortfall," said Carly Fiorina, the company's chairman, president and chief executive officer, in a statement.

HP blamed its woes on "margin pressures, adverse currency effects, higher-than-expected expenses and business mix," according to a company statement.

HP's shares were trading at $US33.38 at around noon on Monday, down $US5.75 or 14.7 percent from Friday's close.

For the fourth quarter, HP reported net revenue of $US13.3 billion, up 17 percent from last year's $US11.4 billion. Net revenue rose 15 percent for the full fiscal year, to $US48.8 billion from $US42.3 billion.

Regarding the PricewaterhouseCoopers plan, Fiorina said in the statement: "I am unwilling to subject the HP organization to the continuing distraction of pursuing this acquisition any further."

HP plans to continue growing its consulting business, and may acquire another company to do so, she added.

HP saw its highest growth during the fourth quarter in the Asia-Pacific region, where revenue rose 36 percent to $US1.9 billion. Europe posted a 15 percent revenue increase to $US4.5 billion, while U.S. revenue jumped 13 percent to $US6 billion. The company's revenue in Latin America rose 11 percent to $US600 million.

HP's imaging and printing systems division grew its revenue by 6 percent, while revenue in its computing systems division increased to 29 percent. The IT services division grew its revenue 15 percent.

For the full fiscal year, HP reported net income of $US3.6 billion, up 15 percent from 1999's $US3.1 billion. Earning per share for the year rose to $US1.73, a 16 percent increase over last year's $US1.49.

HP expects to grow its revenue between 15 percent and 17 percent in fiscal year 2001, the company said.

Fiorina will give a keynote at Comdex on Monday.

HP, in Palo Alto, California, can be reached at http://www.hp.com/.

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