HP issues profit warning

New car incentive scheme obviously hasn't done the business yet

Hewlett-Packard has warned of the "increased risk" of profits falling below expectations for the year ending 31 October. The US vendor did not make a formal announcement, but spoke to analysts yesterday, saying that weak North American server sales may pull down figures for Q4. HP had hoped that the changes put in place by new CEO Carly Fiorina would patch up more long standing problems before the financial year end. Earlier this month Fiorina had described a problem in the North American Unix server sales force which had damaged sales in Europe and Asia. She said the weak links in the chain had been removed, and the company had a "decent shot" at meeting fourth quarter profit forecasts. However, HP has not been able to compensate for this shortfall through cost cutbacks and pushing other areas of its business. Brad Driver, investor relations manager at HP, said yesterday that last month's earthquake in Taiwan had disrupted PC manufacture, meaning this division could not save the day for the company. Driver added that HP was comfortable with some of the reduced forecasts analysts issued yesterday. "Why else would we tell them there's increased risk in the quarter?" he said. The PC vendor saw shares drop $6.25 to $70.33 on the New York Stock Exchange yesterday, rising slightly today to $71.187. This is a far cry from its 52-week high of $118. ®

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