HP to tighten belt

A day after reporting better-than-expected third-quarter earnings, Hewlett-Packard said today that it will make every effort to keep costs down but that it is not anticipating taking any drastic measures to do so.

Some analysts commended HP for its ability to control expenditures in the face of the Asian economic crisis, pricing pressures, and falling profit margins.

"We're going to continue to maintain a very sharp eye on expense-control," said HP spokeswoman Marlene Somsak. "Layoffs are not on anyone's plan at HP. We've been very lucky as a company to be able to rely on voluntary methods."

In the past, HP has adjusted the levels of its flex--or temporary--workforce, and has instituted early retirement options when necessary.

In the near term, Somsak said she expects more of the same types of cost controls to be imposed at the company, including outsourcing of work, reallocation of employees from different departments, reductions in travel and meeting expenses, and the discontinuation of some internal training courses.

The company also is implementing a temporary 5 percent reduction in salary for 2,400 managers during its fourth fiscal quarter, which ends October 31.

"There is no plan announced at this point to extend that," Somsak said. "Management is aware that indeed it could go forward if it is for the health of the company."

As previously reported, HP also will close its U.S. offices for four days in December in an effort to reduce costs.

Yesterday, the company posted net income of $621 million or 58 cents per diluted share for the quarter, compared with earnings of $617 million or 58 cents per diluted share a year ago. Wall Street expected the company to report earnings of 54 cents a share, according to First Call.

HP stock was up more than 4 percent in midday trading today after the company was upgraded to a "buy" rating from "hold" by ABN AMRO.

The company's shares have traded as high as 82.375 and as low as 49 during the past 52 weeks.