Reacting to a sharp drop in its stock price, Hewlett-Packard has issued a statement reiterating its warning about fourth-quarter earnings and expressing surprise at the negative market reaction.
HP's share price has fallen sharply since Oct. 1, when President and Chief Executive Officer Carly Fiorina warned investors that fourth quarter earnings would be lower than analyst expectations. The stock price has plunged from $US87.375 on Oct. 1 to $67 on Friday, a total drop of 23%. Since opening trade on Thursday alone, the stock fell $9.625, a drop of 12.6%.
The company will report fourth-quarter results on Nov. 17.
HP expressed surprise at the dramatic fall in its stock, considering what it said is the excellent health of its imaging business, which makes up 75 percent of HP's overall business.
HP also repeated a warning that its computer and imaging business may not meet analyst expectations of 77 cents per share.
The company also emphasised that investors should not confuse those results with the 98 cents per share predicted by First Call/Thompson Financial, an analyst consensus. The latter number also incorporates predicted earnings from Agilent Technologies, which will be split off from HP by mid-2000. Agilent will include HP's test and measurement, semiconductor products, chemical analysis and healthcare solutions businesses.
Outlining the factors responsible for its earnings slowdown, HP said weak sales of Unix servers in North America and the PC component shortage caused by the Taiwan earthquake may cause earnings to fall short. Offsetting those factors are strong PC demand and profitability and growth in printers, imaging products and supplies, HP said.
Hewlett-Packard Co., based in Palo Alto, California, can be reached at+1-650-857-1501 or at http://www.hp.com.