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HP posts a 13% fall in profit

19 February 2009 13:36 (UTC +04:00)

Bakuâ€“ APA-Economics. Hewlett-Packard Co.â€™s quarterly profit dropped 13 percent, and sales ticked up just 1 percent, as even the technology companyâ€™s cash-cow printer ink business was hobbled by the recession, UB News reported.

H.P., based in Palo Alto, Calif., hit Wall Street on Wednesday with a stunning reversal in its outlook for the fiscal year. For the first time in Mark V. Hurdâ€™s tenure as chief executive, the company reduced its full-year revenue forecast. The company now expects revenue to fall as much as 5 percent from the $118.4 billion recorded last year. In November, H.P. surprised investors by forecasting that sales this year would rise to as much as $130 billion.

HP earned $1.85 billion, or 75 cents per share, in the three months that ended Jan. 31. That compares with profit of $2.13 billion, or 80 cents per share, a year ago.

Revenue grew 11% in the Americas to $12.4 billion. Revenue declined 3% in Europe, the Middle East and Africa and 11% in Asia Pacific to $12.0 billion and $4.4 billion, respectively. When adjusted for the effects of currency, revenue grew 13% in the Americas and 1% in Europe, the Middle East and Africa while declining 9% in Asia Pacific. Revenue from outside of the United States in the first quarter accounted for 65% of total revenue, with revenue in the BRIC countries (Brazil, Russia, India and China) declining 22% over the prior-year period while accounting for 7% of total HP revenue.

HP Software HP Software revenue declined 7% to $878 million. Business Technology Optimization portfolio revenue declined 4% while Other Software revenue was down 14%. Operating profit was $140 million, or 15.9% of revenue, up from $49 million, or 5.2% of revenue, in the prior-year period.

HP Financial Services HP Financial Services (HPFS) reported revenue of $636 million, down 1% from the prior-year period. Financing volume increased 2%, and net portfolio assets declined 3%. Operating margin was 6.4% of revenue, down from 6.7% in the prior-year period.

Hewlett-Packard (HPQ: 34.08, -0.26, -0.8%) shares fell 5.7% to $31.14. The company forecast fiscal second-quarter adjusted earnings of 84 cents to 86 cents a share, below the current estimate of 89 cents a share of analysts polled by Thomson Reuters. H-P expects sales during that period to fall between 2% and 3% from the year-ago period. By that measure, sales would come in between $27.5 billion and $27.7 billion, short of the $30.95 billion currently expected by Wall Street.

Separately, shares of PC maker Dell Inc (DELL: 8.65, -0.23, -2.6%) fell 1.9% to $8.49 and International Business Machines (IBM: 91.51, +0.84, +0.9%) gave up 1.5% to $90.15.

For the second quarter, H-P expects revenue to decline between 2% and 3% from $28.3 billion in the prior yearâ€™s quarter, well below analystsâ€™ estimate of $30.95 billion. Excluding charges, the company forecasts earnings between 84 cents a share and 86 cents a share, although these exclude after-tax costs of approximately 14 cents a share. Analysts had estimated earnings of 89 cents a share.