HP issues earnings warning, cuts 3,000 jobs

ITworld.com –

Computer maker Hewlett-Packard Co. (HP) warned investors that it expects to report a revenue decline of 2 percent to 4 percent and earnings between $0.13 and $0.17 cents per share for its second fiscal quarter ending this month, issuing a statement before Wall Street's starting bell on Wednesday.

The company will eliminate up to 3,000 management positions, as a result of the earnings shortfall, and will require employees to take incremental days off, according to the statement.

HP's revised earnings estimate includes a one-time, $150 million charge for writing down the value of unsold consumer computer equipment.

A survey of 16 financial analysts by First Call/Thomson Financial drew a consensus estimate for HP's earnings of $0.35 per share, an estimate that included the $150 million write down, said a First Call spokesman.

HP attributes the financial shortcomings "primarily to rapid deterioration in consumer information technology spending around the world," according to the statement. HP also expected currency values relative to Europe to change more in their favor during the quarter, but the dollar did not weaken as expected. HP cited a 4 percent adverse currency effect.

"When we issued our previous second fiscal quarter guidance, we had limited visibility into the extent of the U.S. consumer and commercial downturn, its potential impact on other regions and the continuation of adverse currency effects," said Carly Fiorina, HP's chairwoman, president and chief executive officer in the statement. "At this time, it is quite clear that the U.S. downturn in the consumer market is now spreading to other regions, notably Europe."

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