Hewlett-Packard reported a mere one per cent growth in profit for its third quarter, as widespread cost cutting balanced the impact of the Asian crisis and a flat personal computer business.
A profit warning three weeks ago meant the poor performance was not a shock for the market, even inching ahead of many analysts? revised expectations.
For the quarter ending 31 July, revenue was up five per cent to $10.98 billion on the same period last year, with earnings increasing to $621 million compared to $617 million.
"We're not satisfied with our overall performance, particularly in these two areas... [modest growth in revenue and earnings] were substantially below the goals we had entering the quarter,? said chief executive Lewis Platt. ?We're pleased with the progress our people made in reducing the rate of expense growth."
Only two weeks ago the company said 2,000 managers would take a five per cent pay cut as part of the battle against sharply rising costs that have been cutting into profits.
Things may not look up for some time yet however. The company lowered revenue growth targets from 15 per cent to a modest eight per cent.
"There are reasons for continued caution. There are no signs of an immediate turnaround in Asia, and there is some uncertainty about macro economic conditions in the US and in Latin America. And, as always, competition across our businesses remains intense," added Platt.
The company said at some point a charge against earnings - in the region of $100 million - would be required to cover restructuring costs.
PC revenues remained flat despite increased shipments. High end Unix servers were strong performers, but low end models declined in revenue. HP Openview sales continued to drive revenues in the software business.
Asia Pacific revenues fell 13 per cent in US dollars, particularly painful as HP does one eighth of its business in the region. Europe was up seven per cent, while the US market saw a nine per cent revenue growth.
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