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HP Server Sales Drop Hits Total Earnings

8/17/2004 08:54:00 AM Eastern

PALO ALTO, CALIF. — Although Hewlett-Packard enjoyed a 19 percent sales increase in its computer segment and an 8 percent sales gain in its imaging and printing business in its fiscal third quarter, the computer maker could not overcome a 5 percent drop in its server segment sales.

The company’s server segment had third-quarter sales of $3.4 billion, down from $3.5 billion year-over-year, while the segment reported a $208 million operating loss, compared with a loss of $20 million in the third quarter of last year.

Company sales in the three months climbed 9 percent, hitting $18.9 billion, up from $17.3 billion in the year-ago period, but down from the $20.1 million reported in the previous quarter.

Total HP operating earnings for the third quarter reached $657 million, compared with $301 million year-on-year, but lower when compared with the preceding quarter’s $1.1 billion.

Net earnings for the company in the third quarter hit $586 million, up from the $287 million reported in the third quarter of 2003, but off when compared with the $884 million posted in this year’s second quarter.

Sales in HP’s computer segment totaled $5.9 billion for the three months, ended July 31, compared with $5 billion in the third quarter of 2003. Desktop revenue increased 26 percent year-over-year, while notebook revenue jumped 12 percent. The personal systems segment reported an operating profit of $25 million in the third quarter, compared with a $56 million loss in the same three months last year.

The imaging and printing group recorded third-quarter sales of $5.6 billion, up from $5.2 billion in the same three months a year earlier. Segment operating earnings rose to $837 million, highest among any HP business, compared with $745 million in the third quarter in 2003.

For the nine months HP revenue increased to $58.5 billion, up from the $53.2 billion posted in the same nine months last year. Net earnings for the period reached $2.4 billion, compared with a year-on-year $1.7 billion.

Sales in the computer business rose to $18.1 billion for the nine months, an increase from the $15.2 billion recorded in the same period a year ago. Segment operating earnings hit $132 million, compared with breakeven last year.

Imaging and printing segment sales for the nine months came in at $17.6 billion, up from a year-ago $16.3 billion. Segment operating earnings for the period rose to $2.8 billion, compared with $2.6 billion in the same period in 2003.

Server segment sales increased to $11 billion for the nine months, up from $10.7 billion in the same nine months a year earlier, while the segment’s operating earnings rose to $66 million, a jump from the $11 million reported in the same nine months last year.

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