Asia’s Slump Leaves HP Net Income Stagnant

Hewlett-Packard Co., the world’s No. 3 computer company, said Monday that its fiscal third-quarter earnings, though better than analysts had predicted, were little changed, hurt by slumping sales in Asia, where economic growth has stalled.

HP earned $621 million, or 58 cents a diluted share, in the quarter ended July 31, just slightly above the $617 million, or 58 cents, recorded in the year-ago period. Analysts surveyed by First Call Corp. expected earnings of 54 cents, down from 62 cents, the forecast before HP warned of weak profit last month. Sales rose 4.9% to $10.98 billion from $10.47 billion.

HP’s results were the ninth time in 10 quarters that it has disappointed investors, and the company isn’t optimistic about a turnaround any time soon. Orders rose just 1%, and sales of PCs were unchanged.

The Palo Alto-based company warned July 21 that third-quarter profit would fall short of expectations, hurt by poor sales of oscilloscopes and other measurement devices in Asia. HP gets about 16% of sales from that region.

Orders during the quarter, which foreshadow future sales, rose just 1% to $10.5 billion from $10.4 billion. In the Asia-Pacific region, orders tumbled 19% in dollar terms.

Many countries in the region are in recession for the first time in decades in the wake of a financial crisis that sent currencies in Thailand, Indonesia and South Korea tumbling.

“There are no signs of an immediate turnaround in Asia, and there is some uncertainty about macroeconomic conditions in the United States and in Latin America,” HP Chairman and Chief Executive Lewis Platt said.

HP reported results after the close of trading. Its shares rose $2.50 to close at $55.25 on the New York Stock Exchange.

In addition to trouble in Asia, HP said sales in its personal computer unit were little changed from a year ago, hurt by industry price cutting. HP, Compaq Computer Corp. and others have been slashing prices to win sales.