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February 23, 2009

HP cuts guidance as profit falls

Attributes the decline to sharp revenue drops in its PC, printer and server businesses

By CBR Staff Writer

HP has reported a 13% decline in net income to $1.85 billion for the first quarter 2009, compared to net income of $2.13 billion in the year-ago quarter, on revenue up 1% at $28.8 billion. The decline was attributed to sharp revenue drops in its PC, printer and server businesses.

Operating income during the quarter fell 5% to $2.49 billion, while diluted EPS fell 6% to $0.75. The company generated cash flow from operations of $1.1 billion and repurchased approximately 34m shares for $1.2 billion.

The company said personal systems revenue declined 19% to $8.78 billion, while imaging and printing revenue fell 19% to $6 billion. Services revenue grew 116% to $8.7 billion, while enterprise storage and server revenue fell 18% to $3.9 billion. Software revenue fell 7% to $878m, while financial services revenue fell 1% to $636m.

Geographically, Americas revenue grew 11% to $12.4 billion, while EMEA revenue declined 3% to $12 billion and Asia Pacific revenue declined 11% to $4.4 billion.

Mark Hurd, chairman and chief executive at HP, said: Our market strength, disciplined cost management and diverse portfolio allowed us to differentiate HP in the global marketplace and gain share in key markets.

For the second quarter, the company expects diluted EPS to be approximately $0.70 to $0.72. For fiscal 2009, it expects diluted EPS between $3.19 and $3.31 and reduced its revenue outlook to $112.5 billion to $116 billion range from the earlier $127.5 billion to $130 billion range.

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