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HP warns of lower earnings

Citing weak business conditions in Asia, Hewlett-Packard warns its third-quarter financial results will likely fall below Wall Street's estimates.

Citing weak business conditions in Asia, Hewlett-Packard today warned its third-quarter financial results will likely fall below Wall Street's estimates.

"With two months' results in, it appears that our third-quarter performance won't match analysts' expectations," Lewis Platt, HP's chief executive, said in a statement.

HP shares fell in after-market trading, retreating to 57.875 on the Instinet system after closing at 61.8125 on the New York Stock Exchange.

Analysts expect HP to post earnings of 62 cents a share, according to a First Call consensus, up from the 58-cents-a-share profits the company posted in the like period a year ago.

Based on figures from May and June, however, earnings are expected to be "flat to moderately lower" compared to the third quarter of 1997, the company said.

HP sounded a similar alarm in May when it warned that second-quarter profits would not be to Wall Street's liking. The company then blamed the sub-par second quarter performance, in which earnings fell 13 percent, on weak sales in Asian markets, PC price wars, and generally high costs of doing business.

"We've done a much better job of managing expenses this quarter," Platt said. "But expense management can't compensate fully for struggling economies in Asia-Pacific and new signs of economic uncertainty elsewhere."

The stock closed today at $61.8125, up only 0.1875 over yesterday. Shares have traded as high as $82.375 and as low as 56 in the past 52 weeks. Today's announcement came after the close of regular trading in the stock markets.

The company is expected to release its full third-quarter financial results August 17.