Business
Sales this quarter will grow about 8 percent from the previous three months, the company said today, suggesting revenue of about $29.6 billion. Analysts in a Bloomberg survey anticipated $29.8 billion on average. Sales fell 2.1 percent to $27.5 billion last quarter from a year earlier.
Hewlett-Packard, the worlds largest personal-computer maker, has cut PC prices and expanded into netbooks — stripped- down laptops that handle Internet functions. The success of those devices has fueled unit sales of computers, at the expense of average selling prices.
“Revenue was down, and that suggests we are in a whole new world right now with the netbook,” said James Brehm, an analyst at the research firm Frost & Sullivan Inc. in San Antonio. “Its really dragging average selling prices down, for all PC manufacturers.”
Hewlett-Packard, based in Palo Alto, California, dropped 87 cents, or 2 percent, to $43.09 in late trading after the results were released. The shares, up 21 percent this year, closed at $43.96 on the New York Stock Exchange.
Profit Decline
Third-quarter net income dropped 19 percent to $1.64 billion, or 67 cents a share, from $2.03 billion, or 80 cents, a year earlier. Excluding some costs, profit was 91 cents a share in the period, which ended July 31. That beat the 90 cents anticipated by analysts.
Earnings will be about $1.12 a share this quarter, Hewlett- Packard said. Analysts projected $1.06.
Revenue from computer services grew 93 percent last quarter to $8.5 billion, boosted by Hewlett-Packards $13.2 billion acquisition of Electronic Data Systems Corp. The profit margin was 15 percent, up from 13 percent a year earlier.
The business, which accounts for about 30 percent of sales, earns higher profit margins than Hewlett-Packards hardware divisions. The company ranks second to International Business Machines Corp. in that market.
“Services revenue is up big, and that shows me that they will continue to grow that business and the integration is growing well,” Brehm said.
Printer Sales
Third-quarter revenue in Hewlett-Packards server and storage business declined 23 percent to $3.7 billion.
Sales in the PC unit fell 18 percent to $8.4 billion last quarter. Unit shipments climbed 2 percent. The operating profit margin in the business narrowed to 4.6 percent, from 5.7 percent a year earlier.
Hewlett-Packard took the PC market lead from Dell Inc. in 2006, and has expanded that edge every quarter since then. The company relies on a network of 80,000 retailers, including the Best Buy Co. and Wal-Mart Stores Inc. chains. To attract more price-conscious shoppers, the company has expanded into netbooks — stripped-down laptops that typically sell for less than $400.
In the calendar second quarter, Hewlett-Packards PC shipments rose 2.8 percent, giving it a 19.6 percent share of the worldwide market, according to Stamford, Connecticut-based Gartner Inc. That contrasted with a 17 percent drop in PC shipments for Dell. Round Rock, Texas-based Dell reports its earnings on Aug. 27.
Hurd, 52, is expanding in other areas as well. The companys ProCurve is challenging Cisco Systems Inc. in the networking-equipment field.
“I feel very good about H-P being the beneficiary of great things when this economy turns around,” Hurd said in an interview. “In these kind of economies, good companies can perform.”