Unix, Notebook Sales Help HP Report Strong Q2

SAN FRANCISCO (05/16/2000) - Hewlett-Packard Co. reported second-quarter earnings today of 87 cents per share, excluding equity gains and one-time charges, handily beating the expectations of Wall Street analysts.

Net revenue from continuing operations was US$12.0 billion, up 15 percent from $10.5 billion in last year's second quarter. Adjusted for currency effects, revenue growth was 17 percent year over year, HP said.

Financial analysts had expected the company to profit by 82 cents a share, according to First Call/Thomson Financial.

The results were driven by strong gains in the sale of HP's Unix servers, desktop PCs and notebook computers, company officials said in a statement.

Carly Fiorina, HP's president and chief executive officer, said in the statement that the company is confident about its future.

The earnings figure of 87 cents excludes expenses related to HP's Enhanced Early Retirement plan, its spin-off of Agilent Technologies, the incremental effect of Stock Appreciation Rights (SARs), and certain equity gains. Including these items, earnings per share for the quarter were 79 cents, HP said.

Net earnings from continuing operations, which includes the above items, grew 17 percent to $899 million. This compares with reported net earnings of $766 million and earnings per share from continuing operations of 73 cents in the second quarter of last year, the company said.

HP's PC business grew faster than that of its top-tier rivals in the same calendar quarter, with unit growth of 57 percent, Fiorina said. The company's notebook division reported revenue and unit growth of 180 percent and 248 percent, respectively.

Growth was slower in HP's imaging and printing segment, which includes printers and digital cameras. Revenue from that segment grew 13 percent year over year before currency effects and channel adoption of HP's Automatic Inventory Replenishment (AIR) program, which reduced reported revenue growth to 9 percent, HP said. The AIR program is designed to enhance HP's supply chain strategy.

HP's shares on the New York Stock Exchange closed at $140, up 4.5 percent. The financial results were announced after the markets closed.

Hewlett-Packard Co., based in Palo Alto, California, can be reached at +1-650-857-1501 or at http://www.hp.com/.

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