Carly Fiorina notched a small victory in Hewlett-Packard's (HPQ) ongoing quest for respect on Wall Street. Two years after acquiring Compaq Computer, HP's stock trades at a steep discount to rivals such as IBM (IBM). But its shares climbed 5%, to $20.76, after HP jolted the market on May 18 with a 12% jump in second-quarter revenues, to $20.1 billion, and a 6% hike in net profits, to $884 million.
HP's results demonstrate the growing appetite for information technology and services. The buying splurge pushed up sales of HP's computer systems by 17%, to $6 billion. Revenues generated by high-end corporate gear and services jumped 9%, to $4.2 billion. "Corporate IT demand continues to improve," says Fiorina.
But cutthroat price competition has hurt HP's profit margins. Although margins are up over last year, they eroded slightly in nearly every category compared with the previous quarter. Now, Fiorina's trick will be to fatten up HP's bottom line in this accelerating market. Hold those bonus points. American Express has been flooding mailboxes with offers of frequent-flier miles for cardholders who agree to meet just once with one of its financial advisers. Now the NASD is calling that advice into question. It's alleging that Amex's financial advisers unit received fees for selling other firms' mutual funds and didn't disclose them properly, the company said in a regulatory filing. The NASD alleges that Amex failed to disclose the revenue from January, 2001, until May, 2003. Amex said it's cooperating with the probe, which is part of an industrywide review by regulators of the practice known as "directed brokerage." Amex could face regulatory sanctions, it said. Known for nurturing executive talent, Procter & Gamble (PG) CEO A.G. Lafley appears to be grooming three potential successors. Susan E. Arnold and Robert A. McDonald, both 50, have been promoted to newly created vice-chair posts from global division presidents and given broader responsibilities. Arnold's expertise is beauty and feminine-care products; McDonald recently has made his mark in global fabric and home-care products. Meanwhile, R. Kerry Clark, 52, remains a vice-chair but now oversees global health, baby, and family care. He previously looked after global market development and business operations. But the race may be on for a while. Lafley, 56, became CEO in 2000 and doesn't plan to retire for at least five years. Federal Reserve Chairman Alan Greenspan has likened his job to eating peanuts: "You keep doing it, keep doing it, and you never get tired." Now he has gotten more time to keep doing it. On May 18, President George W. Bush renominated the 78-year-old central banker to a fifth term. Greenspan has his work cut out for him. Critics in financial markets accuse him of allowing the inflation genie to escape from the bottle by waiting too long to raise interest rates. The nomination, which is expected to face little opposition in the Senate, is for a four-year term. But Greenspan is likely to end his peanut-eating days before that -- in February, 2006, when his separate term as a member of the Fed's board expires. Powered by a resurgent farm economy, Deere & Co. (DE) reported record quarterly earnings and predicted its 2004 profits would hit an all-time high, too. The Moline (Ill.)-based company netted $477.3 million in its fiscal second quarter ended Apr. 30, up 86% from a year earlier. Sales leaped 34%, to $5.88 billion. All three of Deere's major equipment divisions -- agriculture, construction, and lawn-care -- reported big gains. For its full year, Deere now sees profits climbing 24%, to $1.2 billion, on a 25% rise in sales, to nearly $19 billion, as customers replace used machinery. -- Guidant (GDT) CEO Ronald Dollens will retire by yearend.
-- Intel (INTC) shareholders approved a measure to expense stock options.
-- Continental Airlines and other airlines raised fares in response to rising fuel prices. Goodyear Tire & Rubber (GT) shares climbed 5%, to $8.56, on May 19 after the Akron company issued 2003 results that had been delayed by accounting irregularities. Goodyear's fourth-quarter loss shrank to $434 million from $1.2 billion a year earlier.