August 16, 2005 – Hewlett Packard, the world’s largest printer manufacturer and second largest computer producer, said profits for the third quarter fell 88 percent due to costs from bringing back overseas earnings.
Profit for the third quarter at Hewlett Packard’s Imaging and Printing Group fell 7.8 percent to $771 million, from $836 million during the same period last year. The fall in profit came as the company was forced to cut printer prices in order to gain market share, according to a statement by HP’s CEO Mark Hurd in a conference call with investors today. Overall sales for the company rose 9.9 percent to $20.8 billion for the quarter ending July 31.
It has been a busy year of HP, which in February ousted CEO Carly Fiorina and replaced her with Hurd. Following Hurd’s instatement, the company began a series of reorganization measures, including efforts to distance the imaging unit from the PC division and ending a deal to resell Apple’s iPod. In July, HP also announced plans to cut 14,500 jobs and an overhaul of the company’s retirement plan that Hurd has said will save the company $1.9 billion.
"We have succeeded in doing two difficult things at once," Hurd said in today’s call. "We stayed focused on delivering a strong quarterly performance and we launched a significant restructuring effort."
Net income at the Palo Alto-based Hewlett Packard fell to $73 million from $586 million a year earlier, according to a statement the company released today. The steep decline in income was attributed to $988 million in tax-related costs while the company brings back $14.5 billion in over-seas earnings.
Hewlett Packard is forecasting that revenue in the fourth quarter will be in the range of $22.4 billion - $22.8 billion on strong sales of consumer products during the busy holiday season.
With a wide range of products that include digital cameras, televisions PCs and printers, analysts have speculated that HP may be forced to spin-off the Imaging and Printing Group, its most profitable segment, in order to effectively compete with the increased competition from printing newcomer Dell Computer. "We’re in the business we’re in," Hurd said in response to queries about a possible split during today’s call.