Hewlett fight costs HP $75 million

15 May 2002 In its last quarter before it merged with Compaq, Hewlett-Packard (HP) made profits five times greater than it had the year before. But revenues were lower than analysts had forecast and the company spent $75 million (€82.8m) fighting board-member Walter Hewlett’s anti-merger campaign.

HP reported net income of $252 million (€278.2m) for the second quarter ended 30 April, compared with $47 million (€51.9m) in the same period in 2001. Excluding one-time charges, but including merger costs and advertising to combat Walter Hewlett’s campaign against the HP-Compaq merger, net income was $498 million (€549.8m).

But revenues were down 9.6% to $10.6 billion (€11.7bn) and from the $11.4 billion (€12.59bn) reported in the first quarter of fiscal 2002 – which analysts had predicted HP would report for the second quarter as well.

“It does appear on the margin that the lawsuit and management changes may have contributed incrementally to HP’s revenue erosion in the quarter,” said Toni Sacconaghi, an analyst at brokers Sanford Bernstein.

HP chief financial officer Bob Wayman also warned that that profits in the company’s imaging and printing group would dip in the next few quarters.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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