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Hewlett sees weak quarter
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June 6, 2001: 1:37 p.m. ET
Computer, printer maker says sales slowdown moving beyond Europe, U.S.
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NEW YORK (CNNfn) - Executives of Hewlett-Packard warned Wednesday that sales for the latest quarter may be weaker than they previously expected, blaming the shortfall on the slowdown in technology spending in regions beyond the United States and Europe.
The computer and printer maker also said it was moving to cut costs further to try to meet Wall Street earnings forecasts for the quarter, its fiscal third, which ends July 31.
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 CNNfn's Rhonda Schaffler talks about Hewlett-Packard's slowdown. |
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Speaking to investors and analysts gathered for the company's semiannual business update, HP Chairman and Chief Executive Carly Fiorina said sales in May in both the consumer and enterprise markets were soft in all regions, and the company is now "more cautious" about its previous forecast that revenue in the current quarter would be flat to down 5 percent from the $11.6 billion it reported in the prior quarter.
However, she added that the company will make additional expense reductions so that it will meet the Street's current consensus earnings estimate of 23 cents per share. She was not specific about what the cost-cutting measures would be.
"While it is still early in the quarter, May was softer than expected and we are now addressing what is clearly becoming a global slowdown," Fiorina said. "We are taking additional steps to generate revenues and reduce costs while continuing to implement our long-term growth strategy."
When the company reported its fiscal second-quarter results last month, HP executives said they are confident they could meet Wall Street's earnings expectations but said sales could drop as the company faces continued weakness and uncertainty in the U.S. and global economy.
At Wednesday's meeting, Fiorina said the economic slowdown, which so far has had a greater impact on the company's business in the United States and Europe, is spreading to Asia and Africa, and, for the first time, China is deteriorating.
"We are becoming more convinced this is a global information technology slowdown that may last some time," she said. "We are seeing customers becoming more discriminating about how and where and when they spend money on technology."
Although executives have pointed to the weakening global economy as the source of much of the company's financial troubles, they also have acknowledged that execution problems as well.
Under the stewardship of Fiorina, who took the reigns as CEO in July 1999, the company has streamlined its organizational structure, trimming the number of divisions to 16 from 83. It also has shifted its sales strategy, selling directly to roughly 1,000 key customers and leaving other customers to re-sellers and other distributors.
The company also has acknowledged that its newest high-end network servers, dubbed Superdome, have not been selling as quickly as executives had anticipated.
As have many of its counterparts in the information technology industry, HP has taken steps pare back its costs and maintain profits, including eliminating 3,000 management positions and requiring other employees to take days off.
Shares of HP, a component of the Dow Jones industrial average, were down more than 4 percent in New York Stock Exchange trade early Wednesday afternoon. 
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