Earnings A Swan Song For Old HP

In its last pre-merger earnings report, Hewlett-Packard Co. Tuesday said it made a profit for its fiscal second-quarter .

The Palo Alto, Calif.-based computer and printer maker is now officially merged with Compaq Computer and has changed its ticker symbol to HPQ.

The company said its imaging and printing business as well as cost cutting late in the game helped it show a profit before one-time items of $498 million, or 25 cents per diluted share. Last year the company’s profit reached $336 million, or 17 cents per share for the same quarter.

But for revenues, HP slipped slightly from its $11.7 billion last year to only $10.6 billion this year for its 2Q.

A smattering of analysts with research firm Thomson Financial/First Call had expected a profit of 25 cents per share on sales of $11.1 billion.

“We stayed focused and executed well during a difficult quarter,” said HP chairman and CEO Carly Fiorina. “The IT spending environment remains tough around the world. There was real potential for distraction and HP delivered. Looking back at our performance during the first-half of our fiscal year, there is a lot to be proud of. Nevertheless, we are realistic about the hard work ahead of us.”

Those distractions would kill most companies for sure. In the final weeks of the quarter, 400 senior managers were named to their assignments in the new HP, and the company was involved in a highly visible lawsuit with ousted board member Walter Hewlett.

“Weakness in our computing systems business, embedded and personal systems business and our consulting services business persisted in the second quarter, but was offset by solid performance in our imaging and printing and IT outsourcing and support businesses,” said Fiorina. “Despite the tough enterprise spending environment, during the quarter HP held its own relative to our competitors in key segments of the enterprise market, including UNIX servers, storage and printing. While revenues in our consumer business were down slightly, operating profit for the business was strong with all regions of the world posting profitable results.”

HP said it reduced inventory by almost $500 million in the quarter. Cash flow from operations was a healthy $2.1 billion for the quarter, and the company exits the period with nearly $9 billion in cash and short-term investments.

The company also said that its employees would receive a Company Performance Bonus for the first time in 18 months.

However, HP this week began the 2-year, slow and painful process of weeding out 15,000 people from its now 150,000 roster because of the merger.