HP blames Asia for missing Q1 earnings estimates

Hewlett-Packard Co. on Tuesday missed analysts' expectations for its first quarter, returning a profit of $929 million, or 87 cents per share, on revenues of more than $11.

Hewlett-Packard Co. on Tuesday missed analysts' expectations for its first quarter, returning a profit of $929 million, or 87 cents per share, on revenues of more than $11.8 billion.

First Call consensus expected the Palo Alto, Calif., computer and electronics manufacturer to post a profit of 88 cents per share. HP (HWP) shares closed down 25 cents to $61.63 prior to the announcement.

Company officials blamed a "difficult environment" in Asia for the watered- down profits, and indicated that subsequent quarters might experience similar softness.

"Going forward, our challenge is to maintain strong growth while rigorously controlling costs," said CEO Lewis Platt in a prepared release. "Across HP, managers are making tough choices about programs and priorities."

Company officials have already started making some of those tough choices as they will restructure parts of their inkjet business to save more than $100 million per year. The consolidation will lead to a charge of 7 cents per share in the second and third quarters. Hewlett-Packard will take a charge of 5 cents per share in the second quarter and a hit of 2 cents per share in the third quarter.

Also, officials said earnings per share slipped due primarily to an increase in the number of outstanding shares of common stock and equivalents -- to 1.08 billion shares of common stock and common-stock equivalents outstanding, from 1.05 billion shares and equivalents in the first quarter last year.

Revenue in the first quarter for the United States was $5.2 billion, an increase of 21 percent compared with a year ago, while revenue from outside the United States rose 10 percent to $6.6 billion. In Europe, revenue totaled $4.2 billion, an increase of 8 percent. In the Asia-Pacific, Canada, and Latin America, combined revenue grew 14 percent and was $2.4 billion. However, currency effects reduced the company's reported revenue growth of 15 percent by about 7 percentage points.

Orders for the quarter were $12.4 billion, compared with $11 billion in the same period last year. Orders in the U.S. were $5.3 billion, a 27 percent increase from the year-ago quarter. Orders from outside the U.S. were $7.1 billion.

Last quarter, Hewlett-Packard reported a profit of $886 million, or 75 cents per share, on sales of $11.7 billion. In the year-ago quarter, it made $912 million, or 87 cents per share, on sales of $10.2 billion.