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HP Warns of Lower 3rd-Quarter Earnings

July 22, 1998|Reuters

Hewlett-Packard warned that its third-quarter earnings will probably drop, even below analysts' revised forecasts, due to continued weakness in Asia and new signs of economic uncertainty in other regions. "Asia continues to be really weak," Steve Pavlovich, HP's manager of investor relations, said after the earnings warning was released after the market closed. "We're hoping that we've reached bottom, but it's hard to say." As for other regions, he said business in the U.S. was weak in May and June but had started to pick up in recent weeks. He said Europe had a strong May, a weak June and "so far a pretty good July." HP said revenue is expected to grow in the mid-single digits from the third quarter of fiscal 1997, and earnings will be flat to moderately lower compared with 58 cents a share reported a year ago. According to First Call, the Wall Street consensus for HP's third quarter was 62 cents a share. But the company said that number did not reflect the latest adjustments by many analysts, which have brought earnings down substantially in recent weeks. An HP spokeswoman said a more current consensus was in the mid-50-cent range. The warning was the latest in a string of misses for the Palo Alto-based computer giant, whose results have suffered most of the year from the weak economies of Asia, aggressive PC price-cutting and high expenses. HP's shares sank $3.75 to $57.88 on the New York Stock Exchange.

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