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HP Reports 7.4 Percent Gain In Second-Quarter Profit On Record Revenue

May 18, 1993

SAN FRANCISCO (AP) _ Hewlett-Packard Co. astonished analysts and delighted the market Tuesday with strong, balanced growth that resulted in record revenues and a 7.4 percent jump in second-quarter profits.

HP, which dominates the computer printer market, earned $347 million, or $1.38 a share, for the three months ended April 30. It earned $323 million, or $1.27 a share, for the same period last year.

Revenues - boosted by demand the company is scrambling to meet - rose to a record $5.1 billion, a 22 percent increase over $4.2 billion in 1992′s second quarter. It was the first time quarterly revenues topped $5 billion.

The news sent the company’s stock up $5.75 a share to $85.37 1/2 in afternoon trading on the New York Stock Exchange.

″It was definitely not in line with expectations. I don’t think anyone really expected the magnitude of the earnings numbers and the across-the-board strength,″ said Laura Conigliaro, an analyst with Prudential Securities in New York. She and most other industry observers had predicted net income of about $1.20 a share.

The Palo Alto, Calif.-based company has enjoyed a long series of strong quarters after stumbling in the late 1980s.

″Our order and revenue growth were terrific, and earnings were good. Growth was strong in all geographies and reasonably balanced across product areas,″ said Lewis E. Platt, HP’s president and chief executive officer.

″Even in these uncertain times, customers are showing their preference for HP products and services,″ he said.

HP, in addition to printers, is an increasingly big player in the market for workstations, a powerful new generation of personal computers used mostly by businesses. It is also the nation’s leading maker of scientific measuring devices.

The company said orders had risen in all of its product areas. Growth was led by computer systems and peripherals, where orders rose 33 percent during the quarter.

The company has not been able to keep up with demand for many products, particularly its HP DeskJet and HP LaserJet printers, analysts said.

″The products are very simply the best, and that is why they have a very substantial market share,″ said Robert G. Herwick, an analyst with Hambrecht & Quist in San Francisco. He estimated that HP had 70 percent of the laser-jet market and a slightly higher share of the ink-jet market. He had estimated earnings of $1.35.

″I was one of the most bullish, and it beat even my estimate,″ Herwick said of the results. ″It’s a very happy story.″

The company said it also was benefiting from cost-cutting moves - which have included voluntary-severance packages offered last fall.

For the first six months of fiscal 1993, HP earned $608 million, or $2.41 per share, a 3 percent drop from $625 million, or $2.46 per share, in the first half of last year. Revenues grew 20 percent to $9.7 billion from $8.05 billion.

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