HP beats street; enterprise group in the red

Hewlett-Packard Co. beat analyst expectations on Tuesday, helped by profits from its printing, PC, and services divisions

HP announced pro forma earnings per share of US$0.29, for its second fiscal quarter of 2003, ended April 30. The consensus from Wall Street analysts had been for pro forma earnings per share of US$0.27, according to Thomson First Call.

Earnings per share compliant with generally accepted accounting principles (GAAP) came in at US$0.22 per share, on net income of US$659 million. That compares with earnings per share of US$0.24 and net income of US$721 million in 2003's first quarter, ended Jan. 31. It also compares with earnings per share of US$0.13 and net income of US$252 million in 2002's second fiscal quarter, ended April 30, 2002, before HP finalized its Compaq Computer Corp. acquisition.

Net revenue came in at US$18 billion, up from US$17.9 billion in 2003's first quarter and up from US$10.6 billion in 2002's second quarter.

"HP delivered a solid quarter with sequential improvement in revenue and non-GAAP operating profit," said HP Chairman and Chief Executive Officer Carly Fiorina, in a statement.

The Palo Alto, California, company reported profits in its Imaging and Printing, Personal Systems, and HP Services divisions. But HP's Enterprise Systems Group remained unprofitable with "nearly break-even results," according to Fiorina said in the statement.

Total revenue for the Enterprise Systems Group was US$3.9 billion, with an operating loss of US$7 million during the quarter -- compared with a loss of $83 million for the quarter before, HP said. The company reported a "significant turnaround in HP NonStop server sales," and "record" HP Superdome server shipments for the quarter, HP said. Revenue for the group was up $100 million from 2003's first quarter.

HP's Imaging and Printing group reported revenue of $5.5 billion -- down slightly from the previous quarter's $5.6 billion.

Revenue for Personal Systems and HP services were US$5.1 billion and US$3.0 billion respectively, holding steady at the same levels reported in HP's first quarter.

For the second half of 2003, HP expects US$36.4 billion in revenue and US$0.62 in pro forma earnings per share, the company said.

Ahead of the earnings release, HP's (HPQ) shares on the New York Stock Exchange closed Tuesday at US$17.05, up 1.01 pecent on the day.

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Robert McMillan

IDG News Service
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