Those fiscal second quarter figures from Hewlett-Packard Co – net up 25% at $202m on sales up 24% at $2,500m (CI No 932) didn’t go down at all well with the market, which trimmed $4.625 off the price at $57.75. Reason was that the company’s gross and pre-tax margins showed year-to-year and sequential declines, and domestic orders came in significantly below expectations. The company saw a shift in its product mix to lower margin items like personal computers and low-end printers, and away from more profitable minicomputers. Moreover domestic US orders for the quarter were up only 11% at $1,140m, down from $1,170m in January, boding ill for future quarters and raising recessionary fears. And even with strong international orders – helped by the weak dollar, the sluggish US figure pulled the total down to 19.7% compared with 24% sales growth.
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