HP Misses Target for EPS; Scraps PWC Deal
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Hewlett-Packard Company Monday reported a 17 percent increase during its fourth quarter. The company's net revenue stands at $13.3 billion, compared with $11.4 billion in last year's fourth quarter.
The computing systems segment -- a broad range of Internet infrastructure systems and solutions for businesses and consumers -- showed strong growth. During the fiscal year, HP saw revenue growth in the computer systems segment, which went up 29 percent; Unix server revenue, which had a 23 percent increase; and IT services, which grew by 15 percent.
PC revenues were up 40 percent with home PC revenues up 62 percent, notebooks up 164 percent, workstations up 11 percent, and commercial desktops up 8 percent.
During the quarter, HP completed its previously announced 2-for-1 split of its common stock in the form of a stock dividend.
However, the company is dissatisfied with diluted earnings per share (EPS), which are up 14 percent from the year-ago quarter. EPS for the quarter was 41 cents on a diluted basis, excluding investment and divestiture gains and losses, the effects of stock appreciation rights and balance sheet translation, and restructuring expenses.
Including these items, diluted EPS on a reported basis was 45 cents per share on approximately 2.05 billion shares of common stock and equivalents outstanding. This compares with diluted EPS of 36 cents in the same period last year, according to Carly Fiorina, chairman, president and CEO.
"We are pleased that revenue growth is accelerating, but very disappointed that we missed our EPS growth target this quarter due to the confluence of a number of issues that we now understand and are urgently addressing. I accept full responsibility for the shortfall," she said.
She attributed losses to margin pressures, adverse currency effects, higher-than-expected expenses and business mix.
Fiorina added that she was unhappy with a break-off in discussions with PricewaterhouseCoopers (PwC) regarding the potential acquisition of its consulting business.
"We are disappointed that we have not been able to reach a mutually acceptable agreement to acquire PwC's consulting business," she said. "We believe the strategic logic underlying this acquisition is compelling. However, given the current market environment, we are no longer confident that we can satisfy our value creation and employee retention objectives -- and I am unwilling to subject the HP organization to the continuing distraction of pursuing this acquisition any further.
"We remain committed to aggressively growing our consulting capabilities, organically and possibly by acquisition, and are open to other business arrangements to achieve our goals." she said.
For the 2001 fiscal year ending Oct. 31, 2001, HP expects to achieve revenue growth in the range of 15 to 17 percent, compared to the 15 percent anticipated for fiscal year 2000.