Hewlett-Packard reported Wednesday that it enjoyed a profitable fourth quarter for fiscal 2002 but piled up a loss of $903 million for the year. The company, which is in the process of absorbing Compaq after its takeover in May, earned $390 million on $18 billion in revenue for the fourth the quarter, ended Oct. 31. If HP and Compaq had been together at the same time last year, they would have lost $505 million in that year-ago quarter, when the companies rang up $18.2 billion in sales. HP's revenue for fiscal 2002 was $56.6 billion, well exceeding the previous year's $45.2 billion in revenue.

HP's imaging and printing division was the big profit driver, producing $926 million in profit on $5.6 billion in revenue, up 12% from a year ago. However, revenue from the company's personal systems, enterprise systems, and services divisions were all down from the fourth fiscal quarter.

As a result of the Compaq merger and the economy's rebounding like an aging basketball center with bad knees, HP cut 17,900 employees for the year--25% more than it had planned--with 12,500 of the layoffs coming in the second half of the year. HP says it reduced costs by $651 million through its post-merger restructuring efforts, 30% more than the $500 million the company originally predicted. Of that savings, $257 million came from layoffs, $243 million from direct and indirect procurement savings, and $151 million from marketing-program cuts and the closure of facilities.

HP lost a vital cog in the takeover deal this month when former Compaq CEO Michael Capellas resigned as HP's president to take the helm at bankrupt WorldCom. Still, the company is confident the two businesses will continue to mesh; it reaffirmed its consensus earnings estimate of 27 cents per share for its current quarter ending in January.

HP chairwoman and CEO Carly Fiorina says her company continues to deliver on the promises of its merger with Compaq, although she doesn't see "any promise of sustained improvement or signs of strong holiday spending." But, she adds, "when the market turns, which it will, HP will be well-positioned for growth and profitability."