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HP profits rise, rev dips

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CIOL Bureau
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SAN FRANCISCO: Shares of Hewlett-Packard fell to $17.35 on the Instinet electronic trading system from a close of $18.17 on the New York Stock Exchange as investors reacted to the weaker sales and the company's outlook for the current quarter to be flat at best. They finished up 2.37 percent in the regular session.

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Hewlett-Packard, the No. 2 computer maker after IBM., also affirmed Wall Street consensus estimates of 27 cents a share before items, taking into account normal seasonal revenue patterns, for its current, second fiscal quarter.

The company's revenue of $17.9 billion for the fiscal first quarter, a decline of 1 percent from the prior quarter, was below analyst consensus expectations for sales of $18.48 billion, according to research firm Thomson First Call.

Sales of computers in the U.S. market were weaker than expected, and stronger sales in Europe were not sufficient to offset the U.S. weakness, HP said. "You can look at earnings per share all you want, but revenue is the problem here," said Lehman Brothers analyst Dan Niles, who cut his revenue estimate for HP's first quarter by $100 million on Jan. 31 to $18.5 billion. "It's kind of a mixed bag, clearly the U.S. was a lot worse than HP or we expected."

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On a conference call with analysts, HP Chief Executive Carly Fiorina said estimates for spending on information technology this year range from a decline of 5 percent to an increase of 6 percent.

"It is difficult to declare a trend in IT spending in 2003, up or down," Fiorina said.



HP's personal computer business, which it calls its personal systems group, returned to profitability ahead of schedule, swinging to an operating profit of $33 million from a fourth-quarter loss of $68 million. Investors have been keen on when that unit would return to the black.

© Reuters

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