Hewlett-Packard Q1 PC Segment Sales Increase 2%

By Jeff Malester On Mar 24 2003 - 8:00am

Driven by increases in PC and handheld revenue, the personal systems group at Hewlett-Packard (HP) recorded a 2 percent increase in revenue in the company's fiscal first quarter, hitting $5.1 billion, up from $5 billion in the fourth quarter of last year.

New product introductions and normal seasonal sales were primary reasons for the segment's revenue climb. However, notebook revenue dropped in the first quarter, compared with the previous three months.

"HP is making good headway and continues to execute well," said CEO Carly Fiorina. "The first quarter was our best overall profit performance since the merger, demonstrating there is significant leverage in our operating model.

"We made good progress on cost structures, achieved sequential market-share gains in each of our businesses and continued to improve gross margins. Our revenue shortfalls were largely confined to the U.S. market," she said.

HP, in releasing its financial results for the first quarter, ended Jan. 31, mainly compared results of its first three months to the preceding quarter, ended Oct. 31, stating that year-over-year numbers, prior to its merger with Compaq Computer, would not be helpful.

HP's personal systems group also moved into the black in the first quarter, registering a $33 million operating profit, compared with a $68 million operating loss in the preceding quarter.

Operating profit for PCs amounted to 0.6 percent of revenue in the first quarter, compared with a negative 1.4 percent in the fourth quarter of last year. The company attributed operating margin improvement for the last three months to re-engineered channel programs and competitive new product introductions, among others.

HP revenue in the Americas slid 7 percent in the first quarter, compared with the previous quarter, down to $8.2 billion, or 46 percent of total revenue. For the quarter, HP earned $721 million, compared with $390 million in the year-ago period.