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Last Updated: Tuesday, 19 August, 2003, 21:04 GMT 22:04 UK
Hewlett Packard still struggling
Hewlett Packard revealed disappointing results for the third quarter driven by weak sales of personal computers.

Hewlett Packard reported a profit of $858m in the third quarter of the year, or 23 cents per share, below market expectations, but up substantially on the same period last year.

Revenues were $17.35bn, below market expectations, and the company warned that fourth quarter profits and revenues will be lower than expected as well.

"The third quarter is always tough, but we still should have done better," said Carly Fiorina, the company's chairman and chief executive officer.

"Nevertheless, we are confident in our strategy and the actions we're taking. We expect to deliver a strong fourth quarter with every one of our businesses profitable."

The company said that revenues had declined 5% from the previous quarter, reflecting seasonality, while pricing pressure reduced margins for both computers and printers.

More computer sales take place during the last quarter of the year, when people return to school and college or buy them as Christmas presents.

PC sales

Hewlett Packard merged last year with Compaq to become the second largest computer maker after Dell.

But aggressive pricing by Dell has cut into margins, while volumes were also down.

Total US sales - which make up half of Hewlett Packard's market - were up only 1%.

However, notebook computers did better, increasing sales by 27% year-on-year, on an increase of 48% in units sold, and gaining a 1.4% increase in market share.

In all, the personal computer division saw sales fall 3% to $4.97bn, and returned to a loss of $56m after making a profit in the previous quarter.

Printers

Meanwhile, heavy investment in new technology and price wars cut into margins in Hewlett Packard's printer business.

Nevertheless, this division returned a profit of $739m on sales of $5.2bn, confirming HP's market leadership in this area.

Printer sales were up 10% year-on-year, with digital imaging revenues growing even faster with a 16% increase.

Revenues in the services division were also strong, with profits of $334m despite in a decline in consultancy work.

European revenues grew 9%, but a substantial proportion was accounted for by the increased value of the euro.

Sales in Asia and Japan also grew strongly.

Shares of Hewlett Packard closed 2 cents lower, at $22.11 in Tuesday trading on the New York Stock Exchange.

In after-hours trading, they lost $1.72.




SEE ALSO:
Hewlett Packard impresses
20 May 03  |  Business
Hewlett Packard disappoints
27 Aug 02  |  Business
Profits rise at IBM
14 Apr 03  |  Business


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