Hewlett-Packard Co.s first fiscal quarter sales were higher than Wall Streets recently raised expectations, thanks to stronger than expected consumer PC and printer sales.
The computer and printer giant, based in Palo Alto, Calif., posted net earnings of $484 million, or 25 cents per share, which was in line with Wall Streets projections, according to Thomson Financial/First Call. Revenue of $11.4 billion came in slightly higher than analysts had projected.
But the results were well ahead of earlier projections issued before last week, when HP issued a statement pre-announcing its results. On Feb. 4, consensus analyst estimates expected HP to earn only 16 cents per share, according to Thomson Financial/First Call.
Carly Fiorina, HPs chairman and CEO, touted the companys profitability as proof of managements successful efforts to rein in costs and improve efficiencies in the midst of an industry-wide slump.
"Within this tough environment, we generated a meaningful increase in overall revenue versus last quarter based on strong sales in consumer and commercial PCs and digital imaging products, as well as exceptional growth in outsourcing," she said in a statement accompanying the earnings release.
Fiorina once again urged support for HPs $25 billion buyout of Compaq Computer Corp., saying the deal is critical to HPs future success. HP and Compaq shareholders are due to vote on their respective companys plans in late March.
"With Compaqs complementary capabilities, we will materially strengthen many key HP businesses -- including servers, storage, PCs, and IT services and support." She said. "These businesses are becoming increasingly interrelated with our imaging and printing franchise and must be sufficiently profitable in their own right."
The merger, however, is facing strong opposition from Walter Hewlett, an HP board member and son of late company co-founder William Hewlett. In leading lobbying efforts to derail the deal, Hewlett has argued the merger would increase HPs exposure to a weakening PC market, dilute its printer business and divert its attention away from customers by forcing management to focus on the massive integration challenges.
Hewlett has also won the backing of the Packard family foundation, who together control about 17 percent of HPs shares.
HPs first quarter results marked the second consecutive time the companys earnings came in ahead of projections.
Overall, revenue was down 8 percent from the year earlier, but net profits were up more than 240 percent from the $141 million it recorded for the first quarter of 2001.
Excluding one-time charges, HP posted a profit of $564 million or 29 cents per diluted share, compared with $812 million, or 41 cents per share in the year-ago quarter.
HPs digital camera and photo printer business posted the strongest revenue increases, rising 30 percent from the fourth quarter and 34 percent year-over-year. The companys larger imaging and printing systems division, however, posted a modest 2 percent increase from last quarter and a 2 percent decline from a year earlier.
The companys PC business posted a strong 22 percent increase from the previous quarter, but sales still remain well below last years levels, and amounted to a 13 percent decline year-over-year.
HPs UNIX server revenue was down 7 percent sequentially and 21 percent year-over-year. The sales decline was reflective of an industry wide downturn that saw Unix sales fall 25 percent in the United States last year, according to figures released this week by Gartner Dataquest.
Storage revenue declined 4 percent sequentially and 13 percent year-over-year, and software revenue declined 3 percent sequentially and 18 percent year-over-year.
HPs IT services segment, which includes support, outsourcing and consulting services, saw revenues edge up 1 percent sequentially and 2 percent compared to last year.
Looking ahead, HP forecasted revenues would be down "modestly" in the second quarter, and cautioned that a continued weak global economy and tapering off of consumer spending could undermine sales.
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