HP Sales, Cost-Cutting Lead to Profit

Computer maker Hewlett-Packard Co. on Tuesday posted a fiscal second-quarter profit as cost-cutting and printer sales made up for the dampening effect of the slow economy, but warned it did not anticipate a meaningful improvement in information technology spending until 2003.

HP, reporting on its final quarter before concluding the biggest merger in technology history with the acquisition of Compaq Computer Corp., showed a net profit of $252million, or 13 cents a share, compared with $47 million, or 2 cents, in the same quarter last year.

Excluding one-time items, HP showed a profit of $498 million, or 25 cents per diluted share, for the quarter ended April 30, compared with $336 million, or 17 cents, in the year-ago quarter.

That met HP’s own target, set three months ago, and Wall Street expectations.

Revenue, however, was lighter than HP had expected. The company had sales of $10.6 billion, compared with $11.7 billion in the year-earlier period.

“The reality is we have seen no signs of encouragement yet,” Chief Financial Officer Bob Wayman said. Chief Executive Carly Fiorina said in a statement that “while a muted recovery in the second half is still possible, we are not counting on meaningful improvement in IT spending until 2003.”

HP released its earnings after markets closed. Shares rose 52 cents to $20.50 during regular New York Stock Exchange trading, but fell to $19.60 in after-hours trading.