HP Shows Signs of an Upturn

With the ink waiting to dry on the Hewlett-Packard merger with Compaq , HP today announced markedly improved first quarter results, much to the surprise of industry analysts and all those in favor and opposition of the company’s historic and highly contentious alliance with Compaq.

Contrary to original estimates, HP today announced that it expects to exceed revenue expectations for its first fiscal quarter of 2002, an indication that the company may in fact be ready to take on the task at hand with Compaq and convert itself into a full service supplier of hardware and software.

In November, 2001, company earnings were expected to be down from its fourth quarter revenue of $10.9 billion due to the uncertain economic climate. But with the industry showing signs of an earlier-than-expected increase in consumer spending on personal computers and printing equipment, HP now expects to see a notable improvement in quarterly revenue and will report earnings per share above current estimates of 16 cents. HP reported revenue of $45.2 billion in 2001.

The company attributes its first quarter upturn to a concerted effort to curb cost structures and expenses.

HP Chairman and Chief Executive Officer Carly Fiorina issued a public statement saying that that despite the wavering economy, consumer spending is beginning to show signs of life and is immediately reflecting in HP’s gross margins.

“As a result,” said Fiorina, “We are seeing better than expected revenues in our PC and imaging and printing businesses. We are not relenting on the expense side and continue to take decisive actions to improve our cost structure. The results demonstrate that we are focused on our customers and executing well. We remain convinced that we are up to the task of successfully integrating Compaq and creating a powerful new HP,” concluded Fiorina.

The company’s first quarter results will be reported on Feb. 13.

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