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HP beats analyst expectations, but enterprise division slips into the red

Hewlett-Packard's financial results for its second quarter have exceeded analysts' expectations, helped by profits from its printing, PC and services divisions.

The company turned in a net income of $659m (£403m), compared with a net income of $252m for the same quarter for the previous year, before HP finalised its Compaq acquisition.

In the first quarter of 2003 ending 31 January, HP amassed a net income of $721m.

Net revenue came in at $18bn, up from $17.9bn in the first quarter and up from $10.6bn for the second quarter last year.

HP chairman and chief executive officer Carly Fiorina said the figures "represented our strongest operating performance since the merger".

These pro forma figures include adjustments for amortisation of purchased intangible assets, various acquisition-related items and restructuring charges.

"The quarter itself was really good," said Lehman Brothers Holdings analyst Dan Niles. "The top line was close to $300m more than people expected," he said, referring to HP's $18bn net revenue.

HP's imaging and printing group reported revenue of $5.5bn, compared with $4.9bn for the same quarter the previous year. 

Revenue for personal systems was $5.1bn, compared with $2.1bn for the same quarter the previous year,  and for HP services $3.0bn ($1.5bn).

However, HP's enterprise systems group remained unprofitable with "nearly break-even results. Total revenue for the group was $3.9bn, with an operating loss of $7m during the quarter - compared with a loss of $83m for the previous quarter.

Though HP has already cut almost 6,000 jobs from the enterprise systems group, Fiorina said another 1,200 positions will go by the end of the financial year. 

HP also expected to lay off another 3,500 employees across the company by the end of the year to reach its ultimate goal of eliminating 17,900 positions since the Compaq acquisition. 

For the second half of 2003, HP expected $36.4bn in revenue.


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