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Hewlett-Packard Trounces Analysts' Forecasts

Earnings: Profit leaps 33% on strong sales of PCs and servers. Shares climb, company sets stock split.

August 17, 2000|From Times Wire Reports

PALO ALTO — Hewlett-Packard Co. on Wednesday reported a better-than-expected 33% jump in earnings for its fiscal third quarter and set a 2-for-1 stock split, sending its shares up 8% in after-hours trading.

The company said profit from continuing operations rose to 97 cents a share, or $1.01 billion, in the period ended July 31, fueled by higher sales of personal computers and servers that run Internet sites. Revenue grew 15% to $11.8 billion.

The results far exceeded the 85-cent average forecast of analysts polled by First Call/Thomson Financial.

"Last year at this time, we committed to becoming a more aggressive and focused HP, delivering strong top- and bottom-line growth on a consistent basis," said Chief Executive Carly Fiorina, who joined the company in July 1999. "Today's results demonstrate the tremendous progress we're making in all of our businesses around the world."

Hewlett had fallen behind rivals such as Sun Microsystems Inc. in selling powerful computers to Internet companies when it brought in Fiorina as chief executive.

In the latest quarter, Hewlett said revenue from its home PC business grew 62%, despite a relatively flat U.S. retail market. Revenue from sales of notebook computers rocketed 93%.

Sales of Unix servers rose 13%. During the quarter, the company won a contract from Inc. to supply 90% of the computers that run the No. 1 Internet retailer's business, replacing machines from Sun and Compaq Computer Corp.

Consumer business revenue gained 34%, enterprise storage revenue was up 10% and software revenue jumped 57%.

The stock split, effective Oct. 27, is the company's first in four years.

Shares of the Palo Alto-based company shot up $9.88 a share in trading Wednesday on the New York Stock Exchange to finish the session at $120.88. The shares continued up in after-hours trading.

Separately, Novell Inc. said earnings plunged 83% in its fiscal third quarter to $8.6 million, or 3 cents a share, but beat expectations by 2 cents. The software company's revenue fell 17% to $270 million.

The Provo, Utah-based company, which makes software to manage corporate computer networks, said it is still trying to recover from three quarters of lackluster sales in the face of increased competition from companies selling software to help businesses buy and sell goods on the Internet.

Novell shares fell $1.06 to $9.88 in after-hours trading. The shares had closed up 6 cents at $10.94 on Nasdaq before the earnings were released.

Bloomberg News and Associated Press contributed to this report.


Powering Up

Hewlett-Packard's stock has risen about 36% this year, making it the fifth-best performer in the Dow index. The computer maker

has been improving profit margins

while increasing sales.

Hewlett-Packard shares on the NYSE, monthly and latest

Wednesday: $120.88, up $9.88

Source: Bridge News

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