HP misses fourth-quarter expectations, drops PricewaterhouseCooper plans

Hewlett-Packard badly missed expectations for its fourth fiscal quarter, and has decided against acquiring PricewaterhouseCoopers' consulting business.

HP reported net income of $922 million, or 41 cents per share excluding one-time items, for the quarter ended Oct. 31. The consensus from 14 analysts polled by First Call/Thomson Financial was that the company would post earnings of 52 cents per share.

Advertisement:

Including one-time items, the company achieved earnings of 45 cents per share. This compares with earnings of 36 cents per share and net income of $760 million in the year-ago fourth quarter.

"We are ... very disappointed that we missed our EPS growth target this quarter due to the confluence of a number of issues ... . I accept full responsibility for the shortfall," HP Chairman, President and CEO Carly Fiorina said.

HP blamed its woes on "margin pressures, adverse currency effects, higher-than-expected expenses and business mix," according to a company statement.

HP's shares were trading at $33.38 at around noon on Monday, down $5.75 or 14.7% from Friday's close.

For the fourth quarter, HP reported net revenue of $13.3 billion, up 17% from last year's $11.4 billion. Net revenue rose 15% for the full fiscal year, to $48.8 billion from $42.3 billion.

Regarding the PricewaterhouseCoopers plan, Fiorina said in the statement: "I am unwilling to subject the HP organization to the continuing distraction of pursuing this acquisition any further."

HP plans to continue building its consulting business, and may acquire another company to do so, she added.

HP saw its highest growth during the fourth quarter in the Asia-Pacific region, where revenue rose 36% to $1.9 billion. Europe posted a 15% revenue increase to $4.5 billion, while U.S. revenue jumped 13% to $6 billion. The company's revenue in Latin America rose 11% to $600 million.

HP's imaging and printing systems division increased its revenue by 6%, while revenue in its computing systems division increased to 29%. The IT services division increased its revenue 15%.

For the full fiscal year, HP reported net income of $3.6 billion, up 15% from 1999's $3.1 billion. Earning per share for the year rose to $1.73, a 16% increase over last year's $1.49.

HP expects to increase its revenue between 15% and 17% in fiscal year 2001, the company said.

Fiorina Monday will give a keynote at Comdex.

HP, in Palo Alto, can be reached at www.hp.com/.