H-P Hits One Out

Similarly, H-P said it needed to do a better job of inventory management, after inventory levels ballooned by $1.6 billion year over year to $8.4 billion.

The inventory situation, along with end-of-year bonus payments, resulted in H-P posting negative $22 million in cash flow from operations for the quarter.

H-P also announced that it would modify its retirement plan by stopping payments to its remaining traditional defined-benefits pension plan. The move will give H-P a one-time gain of $500 million, although H-P said it would reinvest the savings into offering an early retirement program for eligible employees.

Employees who turn down the early retirement option will be placed in H-P's 401(k) plan, where H-P will now match 6% of employee contributions, vs. its previous 4% level.

Looking ahead, H-P projected $24.5 billion in sales for its fiscal second quarter, with adjusted EPS of 63 cents to 64 cents. Analysts polled by Thomson Financial had expected $24.1 billion with EPS of 63 cents.