Despite scandal, HP’s earnings quadruple
Despite a corporate spying scandal that forced the resignation of its chairwoman, Hewlett-Packard Co. on Thursday said its fiscal fourth-quarter profit quadrupled as it surpassed Dell Inc. as the world’s biggest personal computer maker.
The better-than-expected earnings reassured Wall Street that the quarter’s distractions -- including criminal charges against former Chairwoman Patricia C. Dunn -- did not interfere with business. But as HP approaches $100 billion in annual sales, Chief Executive Mark V. Hurd predicted future growth rates in the single digits.
HP shares rose 34 cents to $40.16 but fell 28 cents to $39.86 in late trading after the earnings were released.
The Palo Alto-based company reported net income of $1.7 billion, or 60 cents a share, up from $416 million, or 14 cents, a year earlier, when HP took a restructuring charge of $1.1 billion. Sales rose 7% to $24.6 billion.
Long dominant in printers, HP reclaimed the mantle of top PC maker for the first time since 2003, as the company capitalized on the rise in computer purchases by home users. Sales of notebook computers, in particular, rose 24% over last year. Sales of desktop machines were flat and sales to commercial clients rose just 4%.
“We continue to believe HP has an advantage in the consumer market as customers prefer to buy laptops at a store rather than online,” Benjamin A. Reitzes, an analyst for UBS Investment Research, said in a report Monday.
HP rival Dell, which sells its computers online and by phone, has seen its margins and market share shrink amid a slowing in corporate purchases.
Dell delayed reporting quarterly results scheduled for Thursday because of an investigation into the company’s accounting by the Securities and Exchange Commission.
HP has had its share of scandal. Dunn was forced to resign from the board of directors in September, as details emerged of corporate spying that began with her attempt to stop boardroom leaks.
Dunn pleaded not guilty Wednesday to four felony identity theft and fraud charges stemming from her alleged role in the probe, in which private investigators used fake identities to obtain private phone records.
The extensive, often embarrassing disclosures apparently did not prove a disabling distraction for the company.
With one-time charges excluded, HP would have earned 68 cents a share for the quarter ended Oct. 31. Analysts surveyed by Thomson Financial expected 64 cents.
“The pretexting/boardroom leak scandal is not having an effect on business,” said Richard Shim, a PC analyst for market researcher IDC. “They’re continuing to do very well.”
For fiscal year 2006, HP reported net income of nearly $6.2 billion, or $2.18 a share, up from $2.4 billion, or 82 cents, a year earlier. Sales for fiscal year 2006 rose 7% to $91.7 billion.
“2006 has been a year of significant progress,” Hurd said. “Even as we turned in good results, we continued to strengthen our long-term position.”
The company expects first-quarter revenue of $24.1 billion to $24.3 billion and earnings per share in the range of 60 cents to 62 cents.
Analysts surveyed by Thomson Financial expect earnings of 60 cents a share for the first quarter of 2007 and $2.48 a share for the year.
