HP holds fast to fiscal 2001 predictions

In the wake of several of its PC competitors issuing profit warnings, Hewlett-Packard Thursday recommitted to its most recent predictions for the company's likely financial performance in fiscal 2001.

For the fiscal year due to end Oct. 31, 2001, HP still expects to see revenue growth of between 15 and 17 per cent, with total operating expenses 10 to 12 per cent above those experienced during fiscal 2000, the company said in a statement issued Thursday.

The company's Internet infrastructure and printing businesses will be the key product areas helping the company achieve its expected revenue growth, Carly Fiorina, HP's chairman, chief executive officer and president, said in a statement.

HP is also likely to report earnings per share for the first quarter of fiscal 2001 in line with analysts' current estimates, the company said. Fifteen analysts polled by First Call/Thomson Financial produced a consensus estimate of 44 cents a share for HP's first fiscal quarter, due to close Jan. 31, 2001. HP is expected to release its first-quarter results during the week of March 2.

The ongoing slowdown in demand in the U.S. consumer PC market is unlikely to impact HP's bottom line as strongly as those of its competitors, since the company derives less than 10 percent of its total revenue from that segment, Fiorina said in the statement.

HP's global reach and diverse product offerings should help to shield the company from the effects of individual market downturns, she added.

Although the company grew its U.S. retail PC business by close to 60 percent in fiscal 2000, HP has been budgeting for only single-digit growth in fiscal 2001, Fiorina said. However, despite the current drop-off in demand in the retail PC market, sales of HP's computers over the recent Thanksgiving holiday were above those of the same period in 1999. The U.S. Thanksgiving holiday is the busiest shopping weekend of the U.S. calendar as consumers stock up on Christmas presents and take advantage of Thanksgiving sales.

PC vendor Gateway issued a profit warning late Wednesday for its upcoming fourth quarter, blaming poor holiday sales of its computers in the run-up to Christmas.

Once a one-time investment-related charge of $200 million charge is factored into its results, the company expects to declare a loss per share of 2 cents, Gateway said.

In October, Dell Computer issued a profit warning for its third fiscal quarter, and then met its lowered revenue expectations. The company cited lower demand for its hardware in Europe and among small businesses as contributory factors.

HP had a rough time earlier this month when the company announced fourth-quarter fiscal 2000 earnings that were significantly below expectations. At the same time, the vendor also revealed it had decided not to go ahead with acquiring the consulting business of PricewaterhouseCoopers LLP.

HP shares closed at $31.62 Wednesday, down 8.5 percent on Tuesday's market close.

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