HP prints its way to a profit in Q4

Hewlett-Packard Co. continued to rely on its strong printing and imaging division to keep up the health of its overall business in its fourth fiscal quarter, as its PC, server and storage products again suffered from weak demand.

HP posted revenue of US$18 billion for the fourth quarter, which ended Oct. 31, the company said Wednesday in a statement. This compared to the combined revenue of US$18.2 billion from HP and Compaq Computer Corp in the same quarter last year. HP, based in Palo Alto, California, completed its acquisition of Compaq earlier this year.

HP also said Wednesday that it would lay off an additional 1,100 workers as a result of the merger, in addition to its most recent target of 16,800. Most of the additional job cuts will be made in Japan, said Carly Fiorina, chairman and chief executive officer at HP, during a conference call with press and analysts after the earnings results were released.

"I am pleased with our performance when you consider the continued weakness of the IT market," Fiorina said.

Net income came in at US$390 million, or US$0.13 per share, compared with a combined HP/Compaq net loss of US$505 million, or US$0.17 per share, in last year's fourth fiscal quarter.

Pro forma earnings per share were US$0.24. Consensus from analysts polled by Thomson Financial/First Call was that HP would post pro forma earnings per share of US$0.22 and generate US$17.3 billion in revenue.

The pro forma earnings figure reflects a US$331 million adjustment on an after-tax basis, or 11 cents on a diluted per share basis, that includes a US$150 million restructuring charge; US$151 million of amortization of goodwill and purchased intangible assets; and US$155 million for other merger-related items.

The printing and imaging business churned out US$5.6 billion in revenue for the fourth quarter, marking a 12 percent increase year-on-year. HP's personal systems unit, which includes PCs, workstations, notebooks and handheld PCs, was down 6 percent year-on-year to US$5.1 billion HP's flagging enterprise business, which includes servers, software and storage products, continued to show losses. Revenue declined 5 percent compared to the same quarter last year to US$4.1 billion and an operating loss of US$152 million.

The company's services business -- a key driver for its merger with Compaq -- also fell in the quarter. It declined 3 percent year-on-year to US$3.1 billion in revenue.

HP expects to post revenue of US$18.4 billion and pro forma earnings per share of US$0.27 for its first fiscal quarter of 2003, according to the statement.

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