Hewlett-Packard on Tuesday warned that its sales and earnings would be below analysts' expectations in the third quarter as a result of the ongoing economic crisis in Asia. Hewlett-Packard shares gained 3/16 to 61 13/16 ahead of the warning.
First Call consensus expects H-P to return a profit of 62 cents a share in the quarter. Company officials said an analysis of the May and June results combined with current business conditions means that sales growth is likely to be in mid-single digits compared with the third quarter of fiscal 1997. H-P expects flat to moderately lower earnings when compared with last year's third quarter. Last quarter, H-P pocketed $685m (£417m), or 65 cents a share, on sales of $12bn (7.31bn). In the third quarter of 1997, it made $617m (£376m), or 58 cents a share, on sales of $10.4bn (£6.34bn). "With two months' results in, it appears that our third-quarter performance won't match analysts' expectations," said chief executive Lewis Platt in a prepared release. "We've done a much better job of managing expenses this quarter. But expense management can't compensate fully for struggling economies in Asia-Pacific and new signs of economic uncertainty elsewhere."
H-P shares hit a 52-week high of 82 3/8 in May before plunging to a low of 56 in late June. Fourteen of the 24 institutional investment firms following the stock maintain either a "buy" or "strong buy" recommendation.
In an unrelated announcement, H-P said it had approved an increase in the authorisation for the systematic share-repurchase program of $1bn (0.61bn). About $500m (£304m) remains from earlier authorisations for the repurchase program.
It also announced a new authorisation of $2bn (1.21bn) for the repurchase of H-P common stock in the open market or in private transactions.