Azlan rides high as HP profit falls

Hewlett Packard's legendary run of profit growth stopped in Q4 1996 with a four per cent decline, although profit was still up six per cent for the whole year.

The fourth quarter profit of $648 million fell short of analysts' estimates, mainly because of a charge for withdrawing from disk mechanism manufacturing.

'HP has done so well for so long that it's a shock when it ends, but these results really aren't bad,' said John Jones of Salomon Brothers.

For the fourth quarter, HP's turnover rose by 12 per cent to $10.15 billion and orders also leapt, up 15 per cent. This was the main consolation for president Lewis Platt, who admitted he was 'somewhat disappointed with our earnings'.

He said this disappointment was 'tempered by the fact that this was a tough comparison with very strong earnings growth in last year's fourth quarter'. Platt was also encouraged by a reduction in the rise in operating expenses.

In the UK, which does not report separate earnings, managing director John Golding said orders were up 20 per cent on the same quarter last year, and exports from the UK were stable. The company's UK employees will receive a total of #5.7 million in profit sharing. UK turnover topped #1.9 billion for the year.

Worldwide, the strongest product orders were the Pavilion multimedia home PCs, HP9000 servers and general services, while orders for workstations and mobile PCs were weak. Laserjet printers saw moderate order growth, but colour models achieved 'extraordinary growth'.

Operating expenses rose 11 per cent, the slowest rate of increase for several years, mainly because of a fall in hiring. For 1996, profit rose six per cent to $2.59 billion and sales were up 22 per cent to $38.42 billion.

Communications and networking firm Fibernet has reported a pre-tax profit of #328,000 for the year ended 31 August, 39 per cent down on the 1995 figure. The company is blaming the fall on startup costs for its Tanet business. It said that turnover for 1996 was #5.89 million.

Networking distributor Azlan reported a 74 per cent leap in turnover for the half-year ended 4 October, reaching #126.5 million with a pre-tax profit of #6 million.

Pre-tax profit was up 36 per cent on the 1995 figure of #4.4 million.

The firm said it was also on target for the second half of fiscal 1997.

Ed Arnett, managing director of Azlan Northern Europe, put the distributor's success down to its service approach. 'If we weren't adding value for our reseller customers we wouldn't be able to show such figures,' he said.

'The broadliners sell huge volumes of kit, but lose the shareholders money.

'They are envious of what we have achieved, as it all goes to prove that value-added distribution is winning.'

The service side of Azlan's business, including training and consultancy, contributed over 25 per cent of its gross profit. Despite this, gross margin fell slightly, compared with the first half of 1995, from 24.2 per cent to 24.1 per cent.

Operating profit at Kyocera has risen 14 per cent for the six-month period to the end of September 1996. The company recorded a profit of Y64 billion ($576 million) on sales of Y355 billion. Sales were up 12 per cent over the period.

The company has said that strong sales of mobile phone handsets was behind the good results. Kyocera is the third largest manufacturer of handsets in Japan.

German hardware giant Siemens Nixdorf (SNI) blamed slow growth in domestic sales for a fall in profit during financial 1996.

In its year to 30 September, the company returned a profit of DM52 million (#21.2 million), a fall of 19 per cent from last year's figure of DM62 million (#25.3 million), despite a modest increase in sales.

Chief executive officer Gerhardt Schulmeyer was encouraged by the growth in SNI's international business and claimed the company had performed well, considering tough competition and falling hardware margins in Europe.

He said the German economy was slower than other territories and that this was reflected in the results. SNI's international sales rose 13 per cent to DM5.1 million (#2.1 million), while domestic sales rose just two per cent to DM8.5 million (#3.5 million).

During the year, SNI shed more than 3,000 staff. It now employs 34,100 people.