HP’s 4th Quarter Flat; Agilent Trading to Begin
Hewlett-Packard Co., the world’s No. 2 computer maker, said Wednesday that fiscal fourth-quarter profit was little changed, though on stronger-than-expected sales.
Separately, the company said shares of its spinoff Agilent Technologies unit were priced at $30--or $2 above the top of the estimated price range--and will begin trading today on the New York Stock Exchange.
HP reported net income for its core computer and printer businesses of $760 million, or 73 cents a share, in the quarter ended Oct. 31, compared with $759 million, or 72 cents, in the year-ago period. The results were in line with analysts’ estimates.
Both figures exclude HP’s medical device and electronic measurement businesses, which are being split off to form Agilent.
HP sales rose 10% to $11.4 billion, delivering what new Chief Executive Carly Fiorina promised last month. After several cautions from the company, some analysts had lowered their sales growth estimate to about 6%. Fiorina said she is calling on employees to boost sales and earnings 12% to 15% this fiscal year.
“We have some long-standing business issues we need to address, and we’re taking decisive action,” Fiorina said. “We don’t expect an overnight fix, but we’re comfortable we can make substantial progress this year.”
HP’s shares gained $4.88 to $81 in late trading following the earnings announcement.
Sales of most of HP’s server computers were unchanged from a year ago.
Palo Alto-based HP has been struggling to compete with Sun Microsystems Inc. in selling server computers to fast-growing Internet companies. Sun’s sales rose 25% in the quarter ended Sept. 26, showing that HP must work to catch up.
“Sun Micro has been gaining at HP’s expense for some time,” said Bill Milton, an analyst at Brown Bros. Harriman & Co. in New York, who rates Hewlett-Packard shares a “neutral.”
HP is spinning off Agilent to focus on its computer and printer businesses. If all 65 million Agilent shares offered were sold--15% of the company--the offering would raise $1.95 billion.
Agilent plans to pay the proceeds of the initial sale to HP in the form of a dividend. HP will retain an 85% stake in the company but said it will spin off the rest of its Agilent shares to HP shareholders by mid-2000 in a tax-free transaction.
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Other Tech Earnings: Applied Materials Inc. reported a fiscal fourth-quarter turnaround as it profited on rising demand for its chip-making gear. Net income was $307.7 million, or 77 cents a share, contrasted with a loss of $186.7 million, or 51 cents, a year earlier. Sales more than doubled to $1.57 billion from $673.2 million. The results were released after the markets closed. Applied Materials closed up $4.50 at $110 on Nasdaq.
