SAN JOSE, Calif. – Hewlett-Packard Co.’s quarterly earnings jumped 34 percent and matched Wall Street expectations Tuesday, but analysts remained cautious about the computer maker’s long-term outlook amid fierce competition from rivals.
For the three months ended April 30, HP reported a profit of $884 million, or 29 cents a share, compared with $659 million, or 22 cents a share, in the same period of 2003.
Excluding special items, HP earned $1.03 billion, or 34 cents a share. That compared with $877 million, or 29 cents a share, in the same period a year earlier.
Analysts expected the company to earn 34 cents a share, according to a survey by Thomson First Call.
Second-quarter 2004 revenue was a record $20.1 billion, up 12 percent from $18 billion in the second quarter of 2003.
Carly Fiorina, HP’s chairman and chief executive, characterized the second quarter as “strong,” crediting record sales of personal computers, computer hardware to corporate customers, and the firm’s continued dominance in printers, ink and other imaging products. “These results demonstrate that we are winning and growing across the portfolio in an intensely competitive market,” she said.
Although revenue growth in personal computers has outstripped that of rival Dell Inc. in recent quarters, Wall Street veterans sounded notes of caution about HP’s earnings report. Most analysts polled by Thomson First Call rated HP stock a “hold,” and share performance lagged that of HP’s fiercest rivals, Dell and IBM Corp.
“Locked in a seemingly endless struggle with Dell, HP apparently cannot match their competitors’ flexibility … and capacity to ride component pricing trends,” technology analyst Mark Stahlman, managing director of Caris &Co., wrote in a report this week. “At the same time, Dell’s commitment to squeeze HP’s bedrock printer franchise is also likely to be a concern.”
HP’s price-to-earnings ratio, a critical measure of Wall Street’s long-term enthusiasm for a company, is about 22 times estimated earnings – about the same as the ratio for the S&P 500 Index. But it trails the ratios of many tech bellwethers: Dell’s ratio is 32, and Microsoft Corp.’s is 30. IBM’s is 19, while eBay Inc. – one of the highest performing tech stocks since the collapse of the stock market in spring 2000 – has a ratio of 96.
Associated Press
Carly Fiorina, chairman and CEO of Hewlett-Packard Inc., gave the keynote address at the Consumer Electronics Show at the Las Vegas Convention Center Hilton Hotel on Jan. 8.
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