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HP Sees Profit, Cites Merger

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November 21, 2002|Terril YueJones | Times Staff Writer

Hewlett-Packard Co. said Wednesday that it is beginning to realize financial benefits from its merger this year with Compaq Computer Corp. and announced earnings of $390 million, or 13 cents a share, in its fiscal fourth quarter.

The computer manufacturer cut losses in its personal and corporate computing businesses despite a slight dip in revenue to $18.05 billion for the three months ended Oct. 31. Had Palo Alto-based HP and Compaq been operating as a single company in last year's fourth quarter, they would have recorded a loss of $505 million, or 17 cents a share, on sales of $18.17 billion. The acquisition closed in May.

"The results we're announcing today, six months after the launch (of the merged company), validate that vision and demonstrate just how much progress we've made toward achieving our goals," HP Chief Executive Carly Fiorina said in a conference call with analysts.

"Despite the complexity of this task and the realities of the challenge in [technology] markets, we are meeting or exceeding all of our integration targets," she said.

HP shares jumped about 10% to $18.60 in after-hours trading Wednesday after the results were released. They had gained 30 cents to $16.85 on the New York Stock Exchange.

For the full year, HP earned $2.4 billion, or 79 cents a share, on sales of $72.3 billion, including results from both HP and Compaq. That compares with a combined profit of $2.48 billion on $81 billion in sales for fiscal 2001.

For the first quarter of fiscal year 2003, the company said it is on track to meet Wall Street estimates of $18.4 billion in revenue and earnings of 27 cents a share.

HP's revenue grew in all segments: enterprise systems, including high-end servers, storage systems and software; personal systems, including desktop, laptop and hand-held computers; and imaging products, including printers, scanners and digital cameras.

Although it continued to lose money in the key enterprise and personal computing businesses, HP cut operating losses in those units by 64% and 56%, respectively.

Since the merger, HP said it has aligned its global sales force, reduced inventories and introduced more than 100 products.

HP also said it exceeded its work force and cost-reduction targets, trimming 12,500 jobs instead of the 10,000 it had promised by the end of October, and slashing costs by $651 million, ahead of the $500 million it previously had pledged.

"We still have a lot of work to do," Fiorina said. "But our strategy is working, we're executing well, and we're picking up momentum."

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