PCs help HP to a profit despite soft US revenue

PCs help HP to a profit despite soft US revenue

Hewlett-Packard has reported a healthy profit for its first fiscal quarter of 2003, helped by a return into the black for its PC business. Revenue fell slightly below forecasts, however, due to weak spending among businesses in the US and Latin America.

HP's net earnings for the quarter came in at $US877 million excluding certain charges and other adjustments on revenue of $US17.9 billion. Including the adjustments, HP reported net earnings of $US721 million for the quarter ending January 31.

The company's personal systems group reported an operating profit of US$33 million for the quarter, compared to a loss of $68 million in the previous quarter. Sales of consumer PCs and handheld computers increased "significantly", though notebook, business PC and workstation sales declined, the company said.

HP's enterprise systems group managed to narrow its loss for the quarter thanks to improved cost management, from an operating loss of $US129 million a year earlier to a loss of $US83 million in the previous quarter. However, revenue for the group dropped 6 per cent sequentially to $US3.7 billion.

The company's printing and imaging business, which generates the bulk of its profit, benefitted from strong holiday sales but was hurt by weak spending by enterprises.

Revenue totalled $US5.6 billion, flat compared with the immediate prior quarter, while operating profits of $US907 million were down sequentially by 4 per cent, HP said.

Services revenue came in at $US3 billion, down 3 per cent sequentially. Operating profit in that group fell 6 per cent to $341 million.

HP said its services business maintained double-digit profit margins.

Overall the company reported its best profits since the completion last year of its merger with Compaq Computer, HP's chairman and chief executive officer, Carly Fiorina, said.

"HP is making good headway and continues to execute well," Fiorina said. "Our revenue shortfalls were largely confined to the US market as weak commercial spending continued."

Cost savings resulting from the integration of HP's business with that of Compaq Computer reached $US734 million for the quarter, 14 per cent ahead of plan and up from $US482 million in the fourth quarter of 2002, HP said.

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