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Hewlett-Packard Maintains Revenue Expectations

With other PC makers warning, H-P says it still expects revenue to grow 15% to 17% in fiscal 2001.



CEO Carly Fiorina began the company's semiannual analyst meeting by allaying the biggest worry on investors' minds in the wake of recent warnings from





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: H-P isn't guiding revenue expectations lower.

Such fears had filled the market after Gateway

warned last week that weak sales over the Thanksgiving weekend would ruin its current quarter. H-P, like Gateway and Apple, depends a lot on consumer PC sales. The company last week issued a press release reaffirming its first-quarter earnings guidance, but it said nothing on the subject of revenue -- a notable silence, given its simultaneous admission that it, too, was seeing soft holiday sales.

Fiorina didn't address the first quarter, which ends in January, but she reiterated the official guidance that H-P gave during its earnings conference call last month: 15% to 17% revenue growth for fiscal 2001. Still, she did say that analysts should "think about revenue growth at lower end of that range, rather than the upper end." Sickly, single-digit growth in the U.S. retail PC business was already factored into that forecast, she said.

Fiorina's reputation has lost much of its former luster in the last six months. In August, her attempt to present H-P's fiscal third-quarter earnings, which included some

questionable nonoperating gains, as an unambiguous blowout annoyed many analysts who felt they had been given misleading guidance. Then last month, the company stunned Wall Street when it missed its fiscal fourth-quarter earnings estimates by almost 20% -- a margin not usually seen in companies of H-P's maturity.

So the boss paid special attention to telling analysts what steps the company was taking to make sure that the prior quarter's problems were behind it: Internal databases are becoming more centralized and efficient. Salespeople are now being paid on revenue received rather than orders booked. Overseas supply contracts have been renegotiated. Appropriate currency hedging decisions have been made. And no one in upper management can expect bonuses for the second half of 2000.

The prospect of starving executives notwithstanding, investors aren't ready to believe. In the wake of Apple's warning, H-P was trading lately down $2.50, or 7.1%, to $32.50.