Hewlett-Packard takes restructuring charge, earnings drop 62 percent
Business and Law Features

Hewlett-Packard takes restructuring charge, earnings drop 62 percent

Wolfgang Gruener

Hewlett-Packard (HP) today delivered a strong fiscal fourth quarter result with revenues climbing 7 percent to from $21.4 billion in Q4 2004 to $22.9 billion. HP's bottom line was hurt by a $1.57 billion restructuring charge that resulted in net earnings of $416 million, down 62 percent from $1.09 billion in the prior year. Excluding the charge, HP's fourth quarter performance beat analyst expectations.

"HP delivered another strong quarterly performance, with balanced revenue growth, good cost discipline, improved margins in key businesses and strong cash flow," said Mark Hurd, HP chief executive officer and president in a statement. "We are pleased with our progress to date, but there is more work ahead of us." Hurd is expected to provide more details; what is known already that the company will shed about 14,500 jobs in the near future to increase profitability of the company.

Most of HP's businesses delivered solid growth - with the exception of the imaging of printing group. Still the major pillar of the company, the group's profit declined from $1.1 billion to $896 billion, mainly due to decreased revenue from the consumer hardware segment. Color laser printer and enterprise multifunction printer shipments experienced significant year-over-year growth, 41 percent and 83 percent, respectively.

The PC business reflected a global shift in PC buying habits. While desktop revenue increased just 1 percent, notebook revenue grew 23 percent, HP said. The PC business reported a profit of $200 million, up from $77 million in Q4 2004. Enterprise Storage and Servers (ESS) reported revenue of $4.5 billion, up 10 percent over the prior-year period. The services segment grew 6 percent year-over-year to $3.9 billion, software gained 11 percent to $514 million. HP said it exited the quarter with $13.9 billion in cash and cash equivalents.

Total revenues for the 2005 fiscal year were $86.7 billion, up from $79.9 billion in 2004. HP's share ended the day at $29.00, but climbed to $30.65 in after market trading.