HP earnings dip nearly 10%, will cut salaries

From CNET News.com: Hewlett-Packard is facing the reality of the recession, and finally slipped up on its earnings.

For the fiscal first quarter, the PC maker earned a profit of $1.9 billion, or 75 cents per share. That's down 9.5 percent from a profit of $2.1 billion, or 80 cents per share, the same quarter a year ago. It recorded a 1 percent uptick in revenue from a year ago, at $28.8 billion. Analysts were expecting revenue of $31.9 billion, and earnings of 93 cents per share. Part of the discrepancy is due to $431 million, or 18 cents per share, of adjustments, which HP is making in regard to amortization on purchased assets, restructuring and acquisition-related charges. Note that without the adjustments, HP would have delivered 96 cents per share as expected.

HP experienced revenue declines in every area of its business with the exception of Services, which is its EDS unit purchased last year. Services revenue increased 116 percent to $8.7 billion due mostly to the acquisition. Revenue from notebooks dropped 13 percent, and desktops 25 percent. HP's total PC shipments were also down 4 percent for the quarter.

Chief Executive Mark Hurd remained upbeat during a call with analysts. "We executed well in a challenging market," he said Wednesday afternoon. "I'm particularly pleased with the results of our Services segment. We now have a second segment with significant recurring revenues." The Services unit contributed one third of the company's profits during the first quarter.

View: Article @ Source Site