SAN JOSE, Calif. – Third-quarter profits fell 89 percent at Hewlett-Packard Co. because of weak technology spending worldwide, but the results posted by the computer and printer giant Thursday beat Wall Street's dramatically reduced expectations.
In the three-month period ending July 31, HP had net earnings of $111 million, or 6 cents a share, compared with profits of $1.05 billion, or 51 cents a share in the comparable period of 2000.
Revenue fell 14 percent, to $10.1 billion from $11.8 billion last year. HP had warned of such a shortfall on July 26, when it also disclosed that it would be laying off 6,000 people, about 6 percent of its work force.
Not counting a gain on extinguished debt, HP reported earnings per share of 5 cents. The average estimate by analysts was 4 cents a share -- down from the 19 cents they were forecasting before HP's warning, according to Thomson Financial/First Call.
"We are managing through what is clearly a significant global economic downturn, and our results reflect this tough environment," said Carly Fiorina, chairwoman and chief executive officer. "However, we are seeing positive signs that our efforts to transform our business and improve our execution are gaining traction, and we continue to make strategic moves to fuel growth."
She said HP's consumer business was particularly hard hit, with sales falling 21 percent. Sales to companies dropped 11 percent.
HP shares gained 3 cents to $24.13 on the New York Stock Exchange before the earnings report. The stock was unchanged early in the after-hours session.
Palo Alto-based HP said it would take a restructuring charge of $250 million to $300 million to account for the recent layoffs, which are expected to save the company $500 million a year.
Though HP also eliminated 4,700 positions this year as part of its massive reorganization plan, the company also had been hiring in some areas. Its work force is expected to be 86,000 by the end of the year.
The company has also asked employees to take voluntary pay cuts and use up vacation time. Expenses dropped 5 percent in the third quarter from last year.
In the first nine months of 2001, HP had net earnings of $506 million, or 26 cents a share, on revenue of $33.7 million. Those figures all fell from marks of $2.78 billion, or $1.40 a share, on revenue of $35.5 billion, in the first three quarters of last year.
HP has been profitable every quarter since becoming a publicly traded company in 1957.