Hewlett-Packard Co., the world’s largest maker of personal computers and printers, fell as much as 5.1 percent in late trading after saying that sales haven’t shown signs of rebounding.

Annual revenue will drop 4 percent to 5 percent, the lower end of a forecast range given in February, Hewlett-Packard said. Chief Executive Officer Mark Hurd said he’s basing the forecast on the expectation that the economy won’t improve in coming months.
“I’m not ready to call it better,” he said on a conference call. “It’s roughly going to be the same the rest of the year.”
Hurd, who’s already trimmed jobs and slashed salaries at the company, will eliminate another 6,400 workers in the next 12 months as sales slump for PCs and printers. Hewlett-Packard’s services unit -- bolstered by the $13.2 billion acquisition of Electronic Data Systems Corp. last year -- is becoming “our largest profit driver today,” he said.
Hewlett-Packard, based in Palo Alto, California, fell $1.88 to $34.70 in extended trading. The shares are little changed this year on the New York Stock Exchange.
Second-quarter net income fell to $1.72 billion, or 70 cents a share, from $2.06 billion, or 80 cents, a year earlier, the company said.
Excluding some costs, profit was 86 cents a share in the period, which ended in April. Sales dropped 3.2 percent to $27.4 billion. That compared with estimates of 86 cents in profit and $27.5 billion in sales in a Bloomberg survey of analysts.
Hurd, who marked his fourth anniversary as CEO last month, has used his tenure to pare operating costs and boost profit. In September, after acquiring EDS, he announced plans to eliminate 24,700 jobs. In February, he cut 2009 salaries as much as 15 percent. The job cuts announced equal to about 2 percent of the company’s workforce of 320,000.
Revenue this quarter will drop as much as 2 percent from the previous period, the company said. That signals sales of as low as $26.8 billion, compared with the $27.5 billion average estimate of analysts. Excluding some costs, profit will be 88 cents to 90 cents, in line with predictions.
Sales in the PC unit fell 19 percent to $8.19 billion as prices for desktop computers declined, while operating profit at the unit fell 31 percent. Unit shipments were unchanged. The profit margin, or earnings as a percentage of sales, narrowed to 4.6 percent from 5.4 percent. PCs account for about 30 percent of the company’s sales.
Industrywide PC sales fell 7.1 percent last quarter as companies and consumers curbed spending, according to research firm IDC. To maintain demand, Hewlett-Packard has cut prices, added thinner notebooks and started selling scaled-down portables known as netbooks.
Hurd also has made acquisitions to expand into more profitable businesses, including software and services. He made his biggest bet last year with the takeover of EDS, the No. 2 provider of computer services behind International Business Machines Corp. EDS helped Hewlett-Packard double its second- quarter services revenue to $8.5 billion.
Sales of printers and supplies, such as ink, fell 23 percent to $5.92 billion. Printer shipments plunged 27 percent. Earnings at the business were $1.07 billion, yielding a margin of 18.2 percent.
Second-quarter revenue at Hewlett-Packard’s server and storage business declined 28 percent to $3.46 billion.
“I just think we’re going to need another quarter of data to be able to really make a meaningful statement about any upturn,” Hurd said.
(Source: Bloomberg)