Hewlett-Packard 3Q Net Jumps on Job Cuts

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

SAN FRANCISCO — Hewlett-Packard Co., the world’s second-largest maker of personal computers, said third-quarter profit rose more than analysts estimated and announced a plan to buy back $6 billion of shares. The stock rose 5%.

Net income rose to $1.38 billion, or 48 cents a share, from $73 million, or 3 cents, a year earlier, Palo Alto, California- based Hewlett-Packard said in a statement today. Sales rose 5.4% to $21.9 billion.

CEO Mark Hurd is profiting from a plan to eliminate 15,300 jobs and using the savings to undercut Dell Inc.’s prices in America, the world’s largest PC market. Mr. Hurd is more than halfway through the job cuts. Hewlett-Packard’s American PC shipments jumped 16% in the three months through June, more than double Dell’s growth, according to research firm IDC.

“There’s nothing to critique here,” a portfolio manager at First Source Bank in South Bend, Ind., Michael Shinnick, said. Mr. Hurd has “done what he said he’d do.”

Shares of Hewlett-Packard, also the world’s largest printer maker, rose $1.47 to $35.90 as of 4:32 p.m. in extended New York Stock Exchange trading from a close of $34.43. They have gained 20% this year. Round Rock, Texas-based Dell, which reports results tomorrow, has dropped 24% this year.

Hewlett-Packard said it authorized the largest share buyback in its history to offset shares issued under employee benefit plans. Before today, the highest repurchase authorized was $4 billion in August 2005, the company said.

Excluding some costs, profit for the quarter ended July 31 was 52 cents a share, beating the 47 cents expected on average by analysts including UBS AG’s Benjamin Reitzes. Profit a year earlier was lowered by taxes for repatriated earnings.

Profit this quarter, excluding some costs, will be 61 cents to 63 cents a share on sales of $24.1 billion, Hewlett-Packard said in the statement. Analysts were anticipating 59 cents on sales of $24.1 billion, the average of 24 estimates in a Thomson Financial survey.

Third-quarter PC sales rose 8.3% to $6.92 billion on a 14% jump in shipments. Earnings in the business surged to $275 million from $163 million, widening the profit margin to 4% from 2.6% a year earlier.


The New York Sun

© 2024 The New York Sun Company, LLC. All rights reserved.

Use of this site constitutes acceptance of our Terms of Use and Privacy Policy. The material on this site is protected by copyright law and may not be reproduced, distributed, transmitted, cached or otherwise used.

The New York Sun

Sign in or  Create a free account

By continuing you agree to our Privacy Policy and Terms of Use