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HP earnings to fall short

Citing a slowdown in information technology spending, Hewlett-Packard Co. (NYSE: HWP) said Thursday that its first quarter earnings would fall short of consensus estimates with sales growth in the low- to mid-single digits. HP said it didn't see any improvement until the second half of the year.

HP said its earnings for the quarter ending Jan. 31 will be in the range of 35 cents a share to 40 cents a share. Earnings tracking firm First Call Corp. projected earnings of 42 cents a share.

The warning doesn't come as much of a surprise. A host of Wall Street analysts have flagged shares of HP based on concerns about a weakening economy. HP shares have weakened amid profit warnings from the likes of Dell Computer (Nasdaq: DELL), Micron Electronics (Nasdaq: MUEI), Gateway (NYSE: GTW) and Apple Computer (Nasdaq: AAPL). Wall Street has been skeptical of HP's growth guidance following last month's analyst meeting.

In December, HP sent a memo to employees, asking managers to delay salary increases, cut back on using temporary workers, and encouraging employees to take vacation time, sources close to the company said.

The prior month HP had said it was on track to meet estimates, although it added that softness in the PC market has been "somewhat greater" than it originally thought

In a release, HP CEO Carly Fiorina said the economy slowed dramatically from the last time the company projected growth in the mid-teens. Fiorina said HP had expected a "soft landing" in the economy, but added that there was a "significant change in market conditions in recent weeks."

HP said it was being conservative with its guidance and said it was staying focused on its earnings targets by cutting costs. The company projected gross margins of 27.5 percent to 28.5 percent. The company said it wouldn't provide targets for the full year.>