HP earnings tumble in third quarter

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Hewlett-Packard's (HPQ) earnings dropped 19 percent in its fiscal third quarter as demand for personal computers and printer ink dried up compared to a year ago, the company reported Tuesday.

In the three months that ended July 31, HP earned $1.6 billion, or 67 cents a share, compared to $2 billion, or 80 cents a share, in the year-ago quarter.

Excluding extraordinary items, the tech giant earned $2.2 billion, or 91 cents a share. Analysts had expected HP to earn 90 cents a share, based on consensus estimates compiled by Zacks.com.

Revenue fell two percent to $27.5 billion, compared to $28 billion last year. Driving revenue down were sales of personal computers which declined 18 percent to $8.4 billion with sales of laptops falling 10 percent, while those of desktop computers tumbled 26 percent

Within the companies imaging and printer group, revenues fell 20 percent to $5.7 billion in part on lower sales of printing supplies, which fell 18 percent.

Revenues in the Palo Alto, Calif.-based company's storage and servers and software units also fell by double-digit percentages in the third quarter, while demand for the company's technology support, consulting and outsourcing services increased 93 percent largely on HP's acquisition of EDS, an information-technology outsourcing company that HP bought last year.

The company's financial services unit saw revenues drop one percent to $670 million.

HP said it expects fiscal fourth quarter earnings of about $1.12 a share, excluding one-time items, and anticipates revenues to rise about eight percent.

Shares of HP traded mainly higher in New York Stock Exchange trading ahead of its earnings statement, which was released after U.S. markets closed. HP shares ended Tuesday's session higher, gaining 85 cents, or two percent to $43.96. The stock is a component of the Dow Jones Industrial Average.

In other news Tuesday, the Securities and Exchange Commission asked HP in February about sales of its products to Iran, Syria and Sudan, countries the U.S. views as state sponsors of terrorism. HP officials responded telling the government it had no dealings with Sudan and sales to Iran and Syria were sanctioned by the U.S. government.

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