HP still on track for profit target

PC maker HP remains "very confident" that it will deliver on its stated quarterly profit expectations, despite the downturn in PC sales that is hitting its arch rival Dell.

HP’s chief financial officer Cathie Lesjak said at a Bank of America investment conference that she was confident the company’s personal computer business could meet its operating margin targets of five to 5.5 per cent in fiscal 2009.

She said that while the strong dollar could dampen its revenue expectations, it would have no effect on profits. "We really view the impact (from swings in the value of the US dollar) on profit to be marginal at best," the executive said.

Speaking of the prospects for cutting costs, fuelling growth and further diversifying the company through its recent acquisition of EDS, Lesjak said: "We are feeling very confident about this transaction."

The HP financial executive said the company's PC business – known internally as the Personal Systems Group (PSG) - is no longer benefiting from favourable component pricing that helped boost profits earlier in the year.

But Lesjak said that HP expects to preserve operating margins through existing cost-cutting plans as component prices have turned neutral in terms of margins.

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