Falling short of Wall Street expectations, Hewlett-Packard (HWP)
today reported a
moderate fiscal third-quarter net
income because of slow medical equipment sales and higher costs.
The second-largest computer company reported
of $617 million, or 58 cents a share, compared with $425 million,
or 40 cents, in the same quarter a year ago. Revenue for the
quarter ended July 31 rose 15 percent to $10.5 billion from $9.11
billion a year earlier.
Wall Street expected HP, based in Palo Alto, California, to earn 68 cents a share.
In the aftermath of today's news, HP shares fell to 63-3/8
at the market's close, down 2-3/4 over Friday.
As previously reported by CNET's NEWS.COM on August 15, strong sales, especially in the corporate market,
were expected to propel HP to
improved earnings for the quarter that ended in July
and set the stage for continued growth.
Last year, earnings dipped 26 percent because of losses in certain business
divisions. And last quarter, earnings came in below expectations.
"Our results this quarter were mixed," said Lewis Platt,
HP chairman and chief executive. "On the positive side, we're pleased
with our strong comeback in order and revenue, driven by excellent
acceptance of new products and services."
Strong sales in computer systems, printer supplies, and
semiconductor test equipment were offset by shipment delays in
medical equipment and high costs, Platt said.
Orders for the quarter were $10.4 billion, a 19 percent increase over last
year's third quarter. Orders in the United States grew 25 percent compared
to last year at this time; they were $4.9 billion. And orders from outside the United States
increased 15 percent at $5.5 billion.
Company executives said that a number of factors affected high operating
expenses compared with the second quarter. The most significant were costs
associated with several recent acquisitions and higher expenses for Stock
Appreciation Rights (SARs), which are related to stock options.
"We had expected to see some increases in cost-of-sales and operating
expenses, given our many actions to stimulate growth," said Robert Wayman,
HP executive vice president and chief financial officer, in a statement. "However, lower
revenue in our medical business, acquisition effects, and higher-than-usual
SAR expenses had a greater impact than we expected."
Several key product introductions are in the
works, Platt said. HP will roll out new services, but also has to bring its expenses into line, he said.
Reuters contributed to this report.