NEW YORK—Investors looking for the technology industry to pull the stock market out of the doldrums got a cold dose of reality on Wednesday as technology giant Hewlett-Packard Inc. (H-P) reported disappointing quarterly sales.
Declining consumer demand for computers and printers dragged down H-P’s sales during its fiscal third quarter. The company announced that sales declined 2.1 percent to $27.5 billion. Net profit tumbled 19 percent.
H-P saw its weakest sales in Europe, where the economic recession is still in full swing. Demand has also softened for netbooks—or smaller, cheaper laptop computers with less features—which had been thought of as a panacea for the computer industry.
Sales outside the United States were weak. “Revenue declined 12 percent in Europe, the Middle East and Africa and four percent in Asia Pacific to $9.9 billion and $5.0 billion, respectively,” H-P said in its earnings release. Revenues outside of the United States accounted for 62 percent of the company’s total sales, with 10 percent coming from the developing BRIC nations (Brazil, Russia, India, and China).
“While we would like to see further stabilization in Europe, we are encouraged by the signs we are seeing in U.S. and China, which together represent more than 40 percent of total company revenue,” said Catherine Lesjak during a conference call with analysts on Tuesday.
H-P projects third quarter sales to increase to the tune of eight percent—an optimistic figure—that heavily hinges on how much consumers spend on technology and gadgets during the back to school season.
The rest of the year depends on the usual holiday shopping season and gift-giving. However, this year computer makers have some good news—Windows 7, Microsoft’s next generation operating system, is due out on Oct. 22. Most of the sales are expected to come from consumers.
Printers and printing supplies make up a major portion of H-P’s sales. “Compared to the third quarter last year, total printer units declined 23 percent and consumer and commercial printer hardware units declined 16 percent and 42 percent, respectively,” Lesjak said during the call.
H-P’s results don’t bode well for the computer industry, which is mired in an aggressive price competition between H-P, Dell, Acer, and Lenovo. The market has been hurt by decreasing volume amidst continued decline in prices of personal computers.
“Our goal is to maintain our strategy through this economic cycle and emerge even stronger in the marketplace,” CEO Mark Hurd said during the call.
H-P’s stock (NYSE: HPQ) declined 13 cents to $43.83 on Wednesday trading. Despite the earnings, stock market analyst Jim Cramer declared on his show “Mad Money” Tuesday night that H-P is still a solid pick, and he still believes in the tech industry as a whole.
Former CEO Aiming for California’s Senate Seat
Former H-P chief executive Carly Fiorina announced that she filed papers with the Internal Revenue Service to explore a candidacy for Barbara Boxer’s U.S. senate seat.
Fiorina, a Republican, was CEO and president of H-P from 1999 to 2005. She was replaced by Hurd in 2005 amidst falling stock prices. She served as Sen. John McCain’s top economic advisor during his presidential campaign in 2008.
Declining consumer demand for computers and printers dragged down H-P’s sales during its fiscal third quarter. The company announced that sales declined 2.1 percent to $27.5 billion. Net profit tumbled 19 percent.
H-P saw its weakest sales in Europe, where the economic recession is still in full swing. Demand has also softened for netbooks—or smaller, cheaper laptop computers with less features—which had been thought of as a panacea for the computer industry.
Sales outside the United States were weak. “Revenue declined 12 percent in Europe, the Middle East and Africa and four percent in Asia Pacific to $9.9 billion and $5.0 billion, respectively,” H-P said in its earnings release. Revenues outside of the United States accounted for 62 percent of the company’s total sales, with 10 percent coming from the developing BRIC nations (Brazil, Russia, India, and China).
“While we would like to see further stabilization in Europe, we are encouraged by the signs we are seeing in U.S. and China, which together represent more than 40 percent of total company revenue,” said Catherine Lesjak during a conference call with analysts on Tuesday.
H-P projects third quarter sales to increase to the tune of eight percent—an optimistic figure—that heavily hinges on how much consumers spend on technology and gadgets during the back to school season.
The rest of the year depends on the usual holiday shopping season and gift-giving. However, this year computer makers have some good news—Windows 7, Microsoft’s next generation operating system, is due out on Oct. 22. Most of the sales are expected to come from consumers.
Printers and printing supplies make up a major portion of H-P’s sales. “Compared to the third quarter last year, total printer units declined 23 percent and consumer and commercial printer hardware units declined 16 percent and 42 percent, respectively,” Lesjak said during the call.
H-P’s results don’t bode well for the computer industry, which is mired in an aggressive price competition between H-P, Dell, Acer, and Lenovo. The market has been hurt by decreasing volume amidst continued decline in prices of personal computers.
“Our goal is to maintain our strategy through this economic cycle and emerge even stronger in the marketplace,” CEO Mark Hurd said during the call.
H-P’s stock (NYSE: HPQ) declined 13 cents to $43.83 on Wednesday trading. Despite the earnings, stock market analyst Jim Cramer declared on his show “Mad Money” Tuesday night that H-P is still a solid pick, and he still believes in the tech industry as a whole.
Former CEO Aiming for California’s Senate Seat
Former H-P chief executive Carly Fiorina announced that she filed papers with the Internal Revenue Service to explore a candidacy for Barbara Boxer’s U.S. senate seat.
Fiorina, a Republican, was CEO and president of H-P from 1999 to 2005. She was replaced by Hurd in 2005 amidst falling stock prices. She served as Sen. John McCain’s top economic advisor during his presidential campaign in 2008.
