HP, not appealing to investors

NEW YORK: Bear Stearns on Thursday said it cut Hewlett-Packard fiscal year

2001 earnings per share estimate to $1.80 from $1.95, and lowered its rating to

neutral from attractive, due to concerns about the personal computer industry

and management's guidance.

The cut is due to concerns of a "decent chance that the company will

either lower its expressed guidance... or miss expectations owing to

transitional issues relating to its sales force, weak economic data and lack of

visibility to the expense picture," Bear Stearns said.

The firm said that during a meeting on Wednesday with the computer company's

management Hewlett-Packard reiterated projections of 15 to 17 per cent revenue

growth, gross margin 27.5 to 28.5 per cent, and 10 to 12 per cent expense

growth.

Bear Stearns said it believed the revenue growth assumptions could be

aggressive and lowered its projection to 13 per cent from 15 per cent.

"We also want to note that the management - despite occasional comments

to the contrary - was clearly edging toward the low end of its targeted

range," the firm said.

(C) Reuters Limited 2000.