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HP's profits still healthy

Hewlett Packard has announced net profits of $484 million on revenues of $11.4 billion in the first quarter of its fiscal year ending in January.

Hewlett Packard has anounced net profits of $484 million on revenues of $11.4 billion in the first quarter of its fiscal year ending in January. That compares to revenues of $10.9 billion generated in the fourth quarter of last year and $12.4 billion in the first quarter of 2001.

The profits represent 25 cents profit per share compared to analysts predicitions of 16 cents per share. Gross profits were $564 million but were adjusted for legal fees associated with the Compaq buy out and staff redundancies.

Carly Fiorina, HP chairman and CEO, said: "We are facing the dual challenges of a weak global economy and rapid industry transformation, driven by advances in technology, changing customer requirements and increased competition. Our first quarter results demonstrate HP's continued ability to stay focused on customers and effectively execute our business plan regardless of market conditions.”

"With Compaq's complementary capabilities, we will materially strengthen many key HP businesses -- including servers, storage, PCs, and IT services and support. These businesses are becoming increasingly interrelated with our imaging and printing franchise and must be sufficiently profitable in their own right,” she continued.

HP Middle East also saw good results in terms of growth, continuing the trend set last year. “Last year we grew by 16% in the region, tripled the size of our consulting business and doubled our staff. We are are still in the investment stage because we came comparatively late to the market but we are definitely getting a good return on that investment,” said Graham Porter, marketing manager, HP Middle East.

However, there is still scepticism about the Compaq deal. Kevin McClosky, portfolio manager at Federated Investors, Pennsylvania, said: “HP has some good businesses and Compaq has some decent businesses and they think putting one and one together gets two maybe even three, but we’re not that positive that would happen.”

Walter Hewlett, director and well-known opponent of the deal said that the results simply showed that HP did not need Compaq and particularly its low-profit PC business.

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