Poor PC sales hit HP's profits

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HP has posted a 17 per cent quarterly drop in profits, hit hard as demand for PCs continues to fall.

The PC maker was staring at a profit of $1.72 billion at the end of April, down from $2.6 billion during the same period last year.

Global sales hovered at $27.4 billion, a three per cent drop on last year. HP was hit in almost every area, with desktop sales down 19 per cent to $8.2 billion and laptop sales down 13 per cent.

The figures would have been worse if it wasn't for HP's acquisition of EDS in August 2008. The company bolstered services revenue by 99 per cent, bringing in $8.5 billion for the quarter.

In response to falling sales, HP has announced a fresh round of layoffs affecting two per cent of its global workforce, or nearly 6,420 workers over the next year. HP employs 321,000 worldwide.

The company was also pessimistic when forecasting revenue for the year, saying it would be down by four per cent to five per cent. Last quarter, HP announced a drop of between two per cent and five per cent.

"Customers are telling us, 'We're just delaying as long as we can until we have to buy'," chief executive Mark Hurd said during a conference call.

"CIOs have been told, 'Take that infrastructure, keep the infrastructure running and be very particular about new projects you start. If you can avoid starting that project, avoid starting it'."

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