H-P Down after Lowering Outlook

Hewlett-Packard Company (NYSE:HPQ) shares are down over 4% in morning trade after the company warned second quarter earnings will come below Wall Street estimates. The company expects to earn 88-91 cents a share for its fiscal second quarter. This is below Wall Street forecasts that called for earnings of 95 cents per share for the second quarter. The company said yesterday that there has been however no change to its annual forecast.

Fiscal first quarter profits however exceeded analyst estimates. First quarter adjusted diluted earnings per share were $0.92, down 32% from the prior-year period and above analyst estimates of $0.87 per share. Revenues were $30.0 billion down 7% from the prior-year period slightly below analyst projections of $30.8 billion.

The results were affected by falling sales in the personal computer segment. Sales in this segment dropped 15 percent to $8.87 billion in the three months ended in January as consumers postponed buying new machines. Sales of servers, storage and networking equipment declined 10 percent to $5.02 billion, Hewlett-Packard said.

“In the first quarter, we delivered on our Q1 outlook and remained focused on the fundamentals to drive long-term sustainable returns,” said Meg Whitman, HP president and chief executive officer. “We are taking the necessary steps to improve execution, increase effectiveness and capitalize on emerging opportunities to reassert HP’s technology leadership.”

“Headwinds will likely continue through the second quarter,” Abhey Lamba, an analyst at Mizuho Securities USA Inc., said in a research note yesterday. “The company is again being conservative for the second quarter and remains cautious.” Hewlett-Packard’s printer group also has too many unsold products sitting in dealers’ inventory, Lamba said in an interview. Shifting to more profitable types of services will take time, Lamba said. “It’s not going to be a one-year turnaround,” he said.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.