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HP profits plummet 66 per cent

Q3 forecasts trimmed

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Hewlett-Packard has cut sales targets for the current quarter, while reporting a 66 per cent profit drop in Q2.

The US vendor yesterday recorded net income of $319 million for the quarter ended April 30, compared to $935 million for the same period the previous year. Revenue dropped four per cent to $11.6 billion.

HP blamed sluggish demand in the US and Europe, along with internal structural changes.

The company said home PC sales fell 15 per cent "due primarily to weak demand and associated pricing pressures in North America". Unix server revenues dropped 13 per cent, while PC server revenues were down four per cent.

Sales from its IT services business grew nine per cent, while printer sales dropped three per cent.

HP also chopped its outlook for Q3. "Looking forward to the third quarter, we believe current consensus EPS estimates are reasonable," said HP CEO Carly Fiorina.

"However, given continuing deterioration in key economic indicators and increasing global uncertainty, we think broadening the revenue range slightly from flat to flat to down five per cent is prudent," she added.

HP had already issued two profit warnings this year - just last month Fiorina said the US downturn was spreading to Europe, and warned Q2 sales would be between two and four per cent less than the previous year. At the same time it also announced plans to chop 3,000 jobs in a bid to reduce costs. ®

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