Here's the HWP warning story posted on Yahoo. Looks like a UNIX Server problem, a-la IBM.
Joey
Yahoo! News
Tech Headlines
Wednesday October 27 7:07 PM ET
HP Warns Of Increased Risk Of Missing Forecasts
By Andrea Orr
PALO ALTO, Calif. (Reuters) - Hewlett-Packard Co (NYSE:HWP - news) Wednesday said it saw ``increased risk' of missing
its fourth quarter earnings forecast, setting off a sharp drop in its stock price and leading several analysts to cut estimates.
The company did not make a formal announcement but confirmed late in the day that it had spoken individually to different
analysts, and told them that weak North American server sales could weigh on results for the fourth quarter, which ends October
31.
Hewlett-Packard fell $6.25 to $70.33 in regular trade and was the third biggest declining issue on the New York Stock
Exchange. Later, in after-market activity, it fell more than two dollars from the closing price.
``The issues remain the same,' Brad Driver, investor relations manager at Hewlett-Packard said in an interview. Driver said that
Hewlett-Packard Chief Executive Carly Fiorina had addressed the North American sales problem earlier this month in a
conference call with analysts.
At that time, Fiorina had described a long-standing problem in the North American Unix server sales force, which had caused that
region to underperform Europe and Asia. But she had remained upbeat, saying the company had removed poor performers on its
sales force and had a ``decent shot' of meeting fourth quarter earnings estimates.
Since then, however, Hewlett-Packard has been unable to make up for the sales shortfall through cost cutting and upside in other
business areas, as it had hoped.
Driver said Wednesday that last month's earthquake in Taiwan had disrupted PC production and limited the potential for upside in
that business. He stressed that PCs were not a problem area for Hewlett-Packard but because of the earthquake, that division
would not deliver any positive surprises.
Although Hewlett-Packard has not formally provided estimates, Driver said the company was comfortable with some of the
reduced forecasts analysts issued Wednesday. ``Why else would we tell them there's increased risk in the quarter?' he said.
Indications of the earnings concern emerged gradually throughout the day as analysts one by one reduced estimates. One said that
the company provided guidance in response when he called to inquire about the company's stock price, which has been steadily
losing ground in recent weeks.
The stock is now well off its 52-week high of $118.
Gruntal & Co analyst Mona Eriba lowered her fourth quarter estimate to 70 cents per share from 77 cents, excluding the results
of Agilent, Hewlett-Packard's test and measurement equipment business which is being spun off into a separate company.
Merrill Lynch reduced fourth quarter estimates to 73 cents from 78 cents, and Dan Niles of Robertson Stephens reduced his
estimate to 73 cents from 82 cents previously, and slashed its 12 to 18 month price target from $103 to $85.
Niles also cited a possible slowdown in spending next year due to Y2K concerns by corporate customers.
Hewlett-Packard is scheduled to implement a new incentive-based pay system for its sales force on November 1. |
