HP Profits Flat on Increased Sales

    February 17, 2005

Hewlett-Packard reported flat quarterly profit on sales that rose 9.9% a week after firing CEO Carly Fiorina.

HP’s first quarter profits were $943 million, an increase of 0.7% from $936 million a year ago.

“While we continue to make progress (increasing revenue), there is work to be done to improve our profitability,” CFO Bob Wayman, who is temporarily filling the CEO spot, said in a statement.

According to a Bloomberg article,

“Hewlett-Packard traded at the equivalent of $21.71 at 9:25 a.m. in Germany, up from yesterday’s closing price of $21.06 in New York. The Palo Alto, California-based company yesterday said first-quarter sales rose 9.9 percent to $21.5 billion. Profit before some costs was 37 cents a share, beating the 34 cent average estimate of 14 analysts surveyed by Thomson Financial.

The results allayed investors’ concerns that Hewlett-Packard dismissed Fiorina because of financial or operational stumbles. Hewlett-Packard delivered on Fiorina’s pledge in December to generate ‘predictable’ results after missing analysts’ estimates in three of the past nine quarters. Fiorina’s efforts to stem price cuts on PCs enabled the unit to double profit last quarter.”

“It shows they did not get the revenue growth by selling PCs lower than they should,” said Chuck Jones of Stein Roe Investment Counsel.

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