San Francisco, Aug 20: Hewlett-Packard Co. on Tuesday reported quarterly sales and profits below analysts' forecasts from steep discounting of personal computers which faced bruising competition from rival Dell Inc. The results sent HP shares down 8 percent in after-hours trading as analysts said the company needs to cut costs in order to compete more effectively with No. 1 PC maker Dell, which has grabbed market share by keeping its expenses low and reducing prices.
"It looks like PCs fell back into the red, which is somewhat of a concern given that Dell executed pretty well on the PC side and had a pretty good quarter," said Marty Shagrin, an analyst at Victory Capital, which owns HP shares.
Computer servers also lost money during the quarter, while HP's printer business pulled in a steady stream of profits. Even so, the printer business had an operating margin of 14.1 percent, the lowest for the unit since the fiscal fourth quarter of 2001, said Lehman Brothers analyst Dan Niles.
"Investors are going to have a hard time forgiving them when the printing division had a bit less revenue than expected and the margins were less than what people were looking for," Niles said.
HP, based in Palo Alto, California, reported a net profit of $297 million, or 10 cents a share, for the fiscal third quarter ended July 31, compared with a year-ago loss of $2.03 billion, or 67 cents a share.
Revenue rose to $17.4 billion from $16.5 billion. Bureau Report