Hewlett-Packard tops 4Q estimates

By Larry Barrett ZDII Hewlett-Packard Co. (NYSE: HWP) slipped past analysts' reduced estimates in its fourth quarter and aims to boost earnings and revenue as much as 15 percent each in fiscal 2000.

By Larry Barrett ZDII
 

Hewlett-Packard Co. (NYSE: HWP) slipped past analysts' reduced estimates in its fourth quarter and aims to boost earnings and revenue as much as 15 percent each in fiscal 2000.

The computer company on Wednesday reported fiscal fourth quarter earnings of $760 million, or 75 cents a share, on sales of $11.4 billion.

First Call consensus expected it to earn 73 cents a share in the quarter. However, analysts were expecting a profit of 85 cents a share earlier this quarter before H-P warned analysts that sluggish corporate PC sales and weakness in its UNIX workstation business would crimp fourth-quarter sales and earnings.

H-P shares closed up 1 5/16 to 77 7/16 ahead of the earnings report.

The $11.4 billion in sales represents a 10 percent improvement versus the year-ago quarter when it raked in $710 million, or 72 cents a share, on sales of $10.3 billion. A strong October helped push H-P past its revised target, said Carly Fiorina, president and CEO.

Company executives expect the company to achieve sales and earnings growth of 12 to 15 percent in fiscal 2000. The company also sees room to cut almost $1 billion in annual expenses, though not all of that will end up as net income; H-P needs to boost spending on research & development, sales and customer support, Fiorina said during a conference call with analysts.

"We enter our new year with confidence, we have aligned ourselves to win, and we will invest appropriately," she said. "Be conservative with your first quarter estimates and know that our plan is to build momentum as the year goes on. ... We have the right vision for the Internet and enterprise selling."

For the year, H-P pocketed $3.5 billion, or $3.34 a share, on sales of $42.3 billion compared to a profit of $2.9 billion, or $2.77 a share, on sales of $39.4 billion in fiscal 1998.

For the quarter, total sales in the U.S. jumped to $5.3 billion, a 9 percent improvement. Sales from outside the United States, which was 54 percent of the company's total this quarter, rose 12 percent and totaled $6.1 billion. In Europe, revenue was $3.9 billion, an increase of 5 percent.

In Asia Pacific, revenue increased 41 percent and was $1.4 billion. In Latin America, revenue increased 18 percent to $600 million.

Company officials said PC revenue growth was good, with good profitability despite the Taiwan earthquake disruption, component shortages and constraints and a "very competitive" market.

H-P's server business, which was thought to be a problem area this quarter, was mixed. Its high-end UNIX systems servers posted strong revenue growth but the rest of the server line, including NT servers, was essentially flat.

First Call consensus expects H-P to earn 73 cents a share in its first quarter and $3.27 a share in fiscal 2000.

Its shares moved up to a 52-week high of 118 7/16 in July after falling to a low of 57 11/16 last November.

Sixteen of the 28 analysts following the stock maintain either a "buy" or "strong buy" recommendation.

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