Hewlett Stock Drops After Profit Forecast

Hewlett-Packard Co.’s stock tumbled $3.75 Monday after the high-technology company said second-quarter earnings would fall short of analyst expectations because of disappointing revenue.

Hewlett-Packard’s stock fell to $53.375 in an otherwise upbeat market. The stock was the most active issue on the New York Stock Exchange, with 3.4 million shares changing hands.

Hewlett-Packard said second-quarter earnings, to be announced Wednesday, will be 85 to 90 cents a share--up from 82 cents a share in the year-ago quarter but short of analyst projections of about $1 a share.

In the second quarter last year, Hewlett-Packard earned $202 million, or 82 cents a share, on revenue of $2.5 billion. In the first quarter this year, the company earned $193 million, or 83 cents a share, on revenue of $2.66 billion.

“Though incoming orders continued the good momentum we experienced in the first quarter, the mix of orders was different from what we had planned and we were unable to adjust production schedules quickly enough to accommodate this change,” said John Young, president and chief executive. “As a result of this and other factors, reported revenues will be about 2% to 3% below expectations.

“We also experienced greater than expected pressure on gross margins and higher trade discounts, due in part to the continuing shift in the mix of sales through dealers and other value-added resellers versus direct-to-customers sales.”

Analysts were hard-pressed to elaborate on the news, but they said Hewlett-Packard may have made the announcement to cool off Wall Street speculation that the company would report unexpectedly high earnings.