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HP's 4Q Earnings More Than Double

The company reported strong printer sales as well as growth in tech services to business customers.
Hewlett-Packard reported its first yearly profit since its acquisition of Compaq, although the company is feeling the pinch from lower margins. For fiscal 2003, ended Oct. 31, HP posted net income of $2.54 billion, or 83 cents a share, on revenue of $73.06 billion. In the previous year, it posted a $928 million loss on $72.35 billion in revenue.

All segments of HP's business, with the exception of corporate investments, were profitable during the company's fourth quarter, when HP reported profits of $862 million, or 28 cents a share, on $19.85 billion in revenue. A year ago, the company reported a profit of $390 million, or 13 cents per share, on revenue of $18.04 billion.

For the full year, the company's enterprise-systems group was the only business segment, with the exception of corporate investments, to operate in the red, losing $54 million on $15.38 billion in revenue, down from $16.19 billion in revenue for fiscal 2002. The personal-systems group made a $19 million profit for 2003, up from a loss of $372 million a year ago.

"Profit was impacted by a greater mix of low-margin products," CFO Bob Wayman said during the company's earnings call.

Chairman and CEO Carly Fiorina said the pricing environment has become intense as business and personal systems become more of a commodity. "The market is increasingly one where the leader wins and everyone else loses," she said. Still, companies will hold on to low-margin PC businesses so they can offer their customers a complete package, she added.

HP's imaging and printing group continues to be a winner, reporting a full-year profit of $3.57 billion on revenue of $22.62 billion, up from $20.45 billion in revenue for the previous year. Services profits were essentially flat year over year, at $1.37 billion on revenue of $12.31 billion.

HP estimates revenue will range from $19.1 billion to $19.5 billion in the first quarter of 2004. It introduced more than 100 products this summer, including highly rated digital photography and desktop products aimed at consumers. It launched a line of high-volume copiers Tuesday to compete against Xerox, Canon, and Ricoh.