HP Reports 26% Drop in 3rd-Quarter Net Income
Hewlett-Packard, hurt by weakening demand and taking a $135-million charge to shed its money-losing disk-drive business, on Thursday reported a 26% drop in fiscal third-quarter profit.
The company, which had previously enjoyed robust demand across its broad product line, also warned that some problems affecting its profitability could continue.
HP, the nation’s second-largest computer company, earned $425 million, or 40 cents a share, for the three months ended July 31. It had a profit of $576 million, or 55 cents a share, for the same period last year.
Revenue rose 18% to $9.1 billion from $7.7 billion. Orders were up 8% over last year’s third quarter.
Profit in the latest period was reduced by 13 cents a share because of the charge for closing the disk-drive business and the operating losses in that business.
Hewlett-Packard had warned several weeks ago that its growth was slowing and it would have difficulty meeting analysts’ expectations this quarter. Analysts surveyed by Zacks Investment Research had forecast a profit of 49 cents a share for Hewlett-Packard.
“This quarter’s results confirmed what we’ve said for some time: that it would be very hard to grow consistently at the strong rates we achieved in recent years,” Chairman and Chief Executive Lewis E. Platt said.
More ominously, however, Platt also said: “The near-term outlook across our businesses is uncertain as we work through important product transitions and a tough competitive environment.”
HP announced its results after the market closed. Its stock closed down $3.50 to $40, an 8% tumble, on the New York Stock Exchange.
The company previously issued quarterly results in the morning. But it decided to change the timing to give analysts more time to study the results, a spokesman said. The move also reduces the prospect of quick investor reaction that can cause a stock’s price to swing wildly.
HP’s shares tumbled 10% last month after the company warned that a slowdown in orders would hurt third-quarter revenue and profit. In May, investors drove down HP shares 9% after the company reported second-quarter results that, despite a 25% gain in profit, lagged behind expectations.
The Palo Alto-based company, which makes a wide range of computers, computer printers and test-and-measurement equipment, has been hurt by a general slowdown in demand for computers.
