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HP Q4 PC Sales Off 6%

11/21/2002 08:53:00 AM Eastern

Palo Alto, Calif. - Fiscal fourth quarter revenue in the personal systems group at Hewlett-Packard, which includes personal computers, notebooks and handhelds, hit $5.1 billion, down 6 percent from the $5.4 billion registered in the same three months last year.

However, segment revenue was up 6 percent, compared with the third quarter.

Numbers from last year's fourth quarter were generated as if operations of HP and Compaq were combined.

In a particularly weak personal computer market, HP consumer PC revenue dropped 13 percent in the fourth quarter, compared with the fourth quarter last year, but rose 16 percent from the third quarter this year.

Most important, the personal systems segment reduced its operating loss in the fourth quarter, to $87 million, down from a $377 million loss in the same period last year on a combined company basis.

HP cut its personal systems operating loss in the fourth quarter by 56 percent, compared with the previous quarter. HP's chairman/CEO, Carly Fiorina, has emphasized that the company's PC division would be profitable next year.

HP consolidated revenue in the fourth quarter, ended Oct. 31, remained flat, at $18 billion, down from $18.2 billion in the year-earlier period, when operations were combined. Revenue in the third quarter reached $16.5 billion.

HP reported net income of $390 million in the fourth quarter, while in the same three months in 2001, the combined operations would have reported a loss of $505 million. Excluding extraordinary items, HP earnings in the fourth quarter hit $721 million, whereas on a combined basis, year-ago profit excluding items was $238 million.

'We have delivered solid results in a tough market. HP's revenue grew sequentially in every business in every region,' said Fiorina

HP said is was ahead of schedule in cutting costs and jobs following its $19 billion merger with Compaq last May, and that it had practically finished combining the sales forces of the two companies.

HP reported that merger related cost savings for the second half of 2002 were $651 million, 30 percent above plan. The company completed 12,500 net workforce reductions in the half, 25 percent above plan. The company said it is on track to meet 17,900 targeted job reductions by the end of fiscal 2003.

Looking ahead, HP anticipates $18.4 billion in revenue in the first quarter of 2003. The company also noted that brand advertising would be stepped up in the first half of 2003, compared with the second half of 2002.

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