HP says US PC sales worse than expected

While 36 per cent wiped off Gateway share price

Hewlett-Packard today said Americans were buying fewer of its PCs than expected, but it was still on course to hit financial targets for the year.

"Unlike some of our competitors, HP is far more than a US-centric consumer PC company, with less than ten percent of our business in this segment," Carly Fiorina, HP CEO and Chairman, said to reassure investors.

The California company had only predicted single-digit growth in its US retail PC business, but sales still dipped below expectations.

"While softness in that market has been somewhat greater than we had originally anticipated, we are still experiencing growth over record fiscal 2000 sales levels and our sales this Thanksgiving week were ahead of last year," Fiorina added.

HP expects sales to grow at 15 per cent to 17 per cent for the financial year ending 31 October 2001, with gross margins of 27.5 per cent to 28.5 per cent and total operating expenses ten per cent to 12 per cent above fiscal 2000. It also said it was comfortable with Wall Street estimates of 44 cents per share for the first quarter ending January 31.

Meanwhile, rival PC maker Gateway saw 36 per cent wiped off its share price today after a profit warning. It closed at $18.89 compared with its year high of $81.50 - with technology stocks across the board, from Microsoft to Intel, also sliding. Gateway yesterday warned it would miss estimates for the fourth quarter, blaming sluggish sales over the Thanksgiving weekend. It expects full year revenue of $2.55 billion, or half a billion dollars below forecast figures. ®

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