HP profits down 19 per cent

Executives from HP have forecast that the technology market is stabilising, but said that European is still weak.

Overall profits fell 19 per cent for the quarter, to US$1.6 billin.

Revenues grew by eight per cent in the US, but fell 12 per cent in Europe, the Middle East and Africa. Asian revenue was down two per cent, despite strong growth in China.

“I’m pleased with our execution in a tough business climate,” said HP’s chief executive, Mark Hurd, in a conference call.

“The US market is now stable, but we have yet to seen the same in Europe. Meanwhile some areas, such as China, are seeing double digit growth.”

The biggest, indeed only growth sector for HP this quarter was the services market, with sales up 93 percent to US$8.5 billion.

This was primarily down to EDS, which Hurd described as making “excellent progress” and said there were still cost savings to be made in that division.

The PC market was faring worse, with sales revenue falling 18 percent, despite a two percent growth in shipments. Desktop PC sales fell 26 percent while notebook sales fell by 10 percent.

Server revenue was down 23 percent while storage revenue fell by 21 percent. Despite this the storage and servers division made a profit of US$356 million.

The printing division also suffered, with commercial and consumer printing revenues falling 37 percent and 21 percent respectively, with commercial printing shipments falling by nearly half. However, on the supplies side Hurd said that customers weren’t cutting back too much compared to last year.

But the continuing weakness of the European market will be a worry for some. Cathie Lesjak, HP’s chief financial officer, said that the region still had some way to go before becoming a growth area for the company.

“Europe continues to be the most challenging region,” she said.

“The US continues to stabilise. While we’d like to see more stabilisation in Europe we are encouraged by US and China.”