HP 3Q PROFIT DOWN 19% ,WEAK INK & TONER SALES

[Anonymous]

http://tech.yahoo.com/news/ap/20090818/ap_on_hi_te/us_earns_hewlett_packard
HP 3Q profit drops 19 %, weak ink & toner sales
H.P. Tries to Keep the Ink Flowing
SAN FRANCISCO -Hewlett-Packard Co.’s profit dropped 19 percent in the latest quarter, dragged by ongoing weakness in sales of personal computers and printer ink.The Palo Alto, Calif.-based company reported Tuesday that consumer spending on PCs is improving, and business in China was particularly good. Corporations are still being tightfisted, though.Because of the recession, 2009 is shaping up to be the worst year in nearly a decade for the PC industry. HP, the world’s No. 1 PC maker, has been branching out aggressively into other areas, like technology services and computer networking, but the PC business still makes up nearly a third of its revenue.

Sales in HP’s PC business eroded 18 percent in the three months ended July 31, even as the number of units sold ticked up 2 percent. PC makers have been slashing prices.HP reported after the market closed that it earned $1.64 billion, or 67 cents per share, in the fiscal third quarter. A year earlier the company made $2.03 billion, or 80 cents per share.Excluding one-time items, HP earned 91 cents per share, a penny better than the average estimate of analysts polled by Thomson Reuters.

Sales fell 2 percent to $27.45 billion, slightly ahead of analysts’ projections for $27.26 billion.
Revenue from printing supplies was down 13 percent. One of those supplies — printer ink — has long been one of HP’s biggest moneymakers, but has been facing competition from generic, cheaper brands.

HP has been reluctant to call a bottom in the PC market, as chip maker Intel Corp. did in April — one of the first bullish signs about a turnaround in that sector. Cathie Lesjak, HP’s chief financial officer, said in an interview Tuesday that PC demand appears to have “stabilized.”

Lesjak said the decline in printing supplies revenue was mostly caused by currency fluctuations and changes in the way HP manages inventory at resellers. She said she expects the supplies business to improve over the next couple of quarters.HP shares were down 15 cents to $43.81 in extended trading after closing earlier Tuesday up 85 cents, or 2 percent, at $43.96.

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August 19, 2009 at 11:20 AM