Earnings: HP | Sears | Barnes & Noble

HP 4Q Earnings Surge

SAN JOSE, Calif. - Hewlett-Packard Co. (HPQ) said Thursday its fiscal fourth-quarter earnings surged, beating Wall Street expectations, on higher sales of laptop computers and printers.

For the three months ended Oct. 31, the Palo Alto-based computer and printer maker earned $1.7 billion or 60 cents per share, compared with $416 million, or 14 cents per share, in the same quarter last year.

Sales for the fiscal fourth quarter increased to $24.6 billion, compared with $22.9 billion last year.

Excluding one-time charges, such as $208 million in restructuring-related adjustments and amortization, the company earned $1.9 billion, or 68 cents per share, up 27 percent from the same quarter last year.

Analysts were expecting HP to earn 64 cents per share on sales of $24.1 billion for the quarter, according to a survey by Thomson Financial.

Sears Profit More Than Triples

CHICAGO - (AP) - Sears Holdings Corp. (SHLD), the nation's third-largest retailer, said Thursday its third-quarter profits more than tripled, boosted by $101 million in investment income and cost-cutting. But its sales slide continued and its stock declined sharply.

The parent of Kmart and Sears, Roebuck and Co. said same-store sales, or sales at stores open at least a year, fell 3 percent, reflecting increased competition and fewer transactions.

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Shares in the company tumbled $8.24, or 4.6 percent, to $170.91 in morning trading on the New York Stock Exchange. They had been up 55 percent this year in a reflection of Wall Street's belief in Chairman Edward Lampert to make the company more profitable.

Earnings for the July-through-September period were $196 million, or $1.27 per share, up from $58 million, or 35 cents per share, a year earlier. Excluding certain items, Sears said earnings were 83 cents per share, compared with 48 cents per share a year earlier.

Analysts surveyed by Thomson Financial had forecast per-share earnings of 98 cents. Thomson Financial said it was not immediately known whether analysts included investment income in their estimates.

Revenues dropped to $11.9 billion from $12.2 billion, slightly better than Wall Street's consensus estimate of $11.8 billion. Same-store sales, a closely watched gauge of retailers' success, declined 4.8 percent at Sears stores and 0.7 percent at Kmart.

Despite weaker sales across most product categories, Sears Holdings touted a significant increase in operating income as it reduced expenses and boosted profit margins at Sears stores. The Hoffman Estates, Ill.-based company cited improvement on cost management and "pronounced sales increases" in women's clothing, where the assortment offered has been changed from last year.

"We are excited to enter the holiday sales period with the products we believe our customers want and an approach that focuses our entire organization in support of our stores in delivering superior customer service across all of our businesses and formats," CEO Aylwin Lewis said.

Analyst Howard Davidowitz said Sears continues to turn in the worst retail performance in the industry.

"What you've got is fewer customers coming into the stores and a collapsed retail concept. But you also have a brilliant investor" in Lampert, said Davidowitz, chairman of New York-based Davidowitz & Associates Inc., a retail consulting and investment banking firm.

Sears Holdings has to make another move soon, along the lines of Lampert's original acquisitions of Kmart and Sears, "or they're in trouble," Davidowitz said.

Ulysses Yannas, who follows retail for New Jersey-based Buckman, Buckman & Reid, said Sears is no longer really a retailer.

"It's more of a financial operation than a retailer," he said. "Who am I to say Mr. Lampert isn't doing a great job from a financial standpoint. The problem is the results from an operational standpoint."

Results included $101 million, or 42 cents per share, of income from the company's investment of a portion of its surplus cash. They also included a tax gain of $6 million,or 4 cents a share, and restructuring charges of $4 million, or 2 cents per share.

Sears Holdings owns about 3,800 full-line and specialty retail stores in the United States and Canada.

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Barnes & Noble Reports $2.7m Loss

NEW YORK - (AP) - Barnes & Noble Inc. (BKS), the nation's largest bookseller, reported on Thursday a $2.7 million loss in the third quarter as sales edged higher.

The company said its loss amounted to 4 cents per share for the three-month period ended Oct. 28, compared with a year-ago profit of $327,000, which was break-even on a per-share basis.

The latest results included a 3 cent per share impact due to stock compensation expenses.

Revenues reached $1.1 billion, slightly higher than the year-ago's $1.08 million.

The results were in line with the consensus from analysts polled by Thomson Financial.

The company called the results preliminary and said it will not be in a position to finalize its financial results and related financial statements until the special committee of its board completes its internal review of the company's option grant practices. It said it will then determine what impact, if any, the results of that investigation will have on financial statements.

Barnes & Noble is among dozens of companies being investigated by the Securities and Exchange Commission for stock option practices.

For the fourth quarter, Barnes & Noble expects same-store sales, or sales at stores open at least a year, at Barnes & Noble stores to range from unchanged to an increase in the low single digits. Based on year-to-date results and current trends, the company now expects full year same-store sales to range from unchanged to a slight decrease over a year ago.

The company said it expects earnings per share to be in a range of $1.86 to $1.96 per share for the fourth quarter. For the full year, the company projects a per-share range of $2.20 to $2.30. The company's fourth-quarter and full-year earnings outlook includes a stock compensation expenses of 3 cents per share and 14 cents per share, respectively.

Analysts polled by Thomson Financial expect $1.95 per share in the fourth quarter and $2.27 per share for the year.

Its shares fell $1.03, or 2.4 percent, to $41.60 in morning trading on the New York Stock Exchange.

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