HP has little financial sauce
Hard to get that juice out of the bottle
Hewlett Packard has cautioned that slow sales may lie ahead after seeing its fourth quarter profit fall by 12 per cent. The California-based vendor posted net income of $710 million for the period ended October 31, down on $806 million a year earlier. Turnover was up just 4 per cent to $12 billion, with European sales jumping 15 per cent. Share prices fell from 75 to 68 cents a share. HP had been on a massive cost squeezing exercise for the latest quarter in a bid to curb expenses. Costs had been growing by an annual rate of nearly 20 per cent as recently as six months ago. The dramatic cost-trimming exercise includes a buyout program to cut two per cent of the manufacturer’s 127,000 workforce. This managed to keep fourth quarter expenses flat, accounting for 23 per cent of net revenue. However, sales were weakened in Asia and Latin America due to economic problems in these areas. Asia Pacific revenues plunged 29 per cent, in dollars, or four per cent in local currencies. HP warned that weaknesses in the Asian and Latin American economies could slow sales growth in the year ahead. The vendor also reported a softening in demand in the US, seeing sales increase just four per cent, compared with 17 per cent the previous year. HP’s results, which exceeded Wall Street expectations, also included $170 million in special charges related to restructuring. ®
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