US computer company Hewlett-Packard reported that shares tumbled 12pc in late trading after it cut its forecasts for the rest of the year.
As a result of the share price tumble in the US last night, HP fears the economic downturn will continue to affect the firm.
HP said that during the first three months to 31 January, its net profit reached US$2.6bn, as businesses upgraded IT systems. However, it also reported that computer sales to consumers lingered behind.
Contracts for services, such as hosting and maintaining business computer networks online in the internet ‘cloud’, also produced less revenue than the company had expected.
In the first quarter, its net revenue increased to $32.3bn, in comparison to $31.2bn in the same period a year earlier.
According to chief financial officer Cathie Lesjakn, revenue grew 4pc and net profit increased 16pc as a result of "financial discipline". She said, "HP’s financial strength and discipline helped generate $3.1bn in cash flow from operations, up 28pc year over year." The earnings figures, however, fell short of Wall Street forecasts.
HP has reported that its revenue in the current quarter would range from an estimated $31.4bn to $31.6bn and that net earnings per share would be from 99 cents to $1.01.
Despite the price share tumble, Léo Apotheker, HP CEO, said he was pleased with HP’s EPS and margin expansion during the quarter. "Going forward, we have the opportunity to further capitalise on our customers’ demands for higher value-added solutions," he added.
Later in 2011, HP expects revenue to increase due to cloud services and with the introduction of a TouchPad tablet computer based on the WebOS operating system, which was attained in last year’s $1.2bn acquisition of Palm Inc. The company introduced new smartphones running the software on 9 February.
Article courtesy of Businessandleadership.com