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When the bloom has not fallen off the financial rose at Hewlett-Packard Co., the atypically profitable hardware company is, by its own account, feeling a few thorns in it side.
Despite HP's recently reported 44% profit gain--especially impressive in the face of wilting margins at other hardware suppliers--its earnings of $271 million for the third quarter ended July 31 fell short of analysts' expectations.
Hambrecht & Quist, Inc. analyst Robert Herwick said HP's numbers came in about 10% less than expected.
PROFIT SQUEEZE?
An HP spokeswoman claimed that much of the perceived profit short-comings resulted from slowness in the company's electronic test and measurement business, where sales dipped from $557 million in the same quarter a year ago to $554 million as the defense market continues to weaken. However, analysts pointed out that HP appears to be facing a profit squeeze from both ends of the computer market.
For example, while HP Chief Executive Lewis Platt cited several areas of concern in the company's recent quarterly report [CW, Aug. 23], one of the most notable to the financial community is a growing reliance on commodity items sold through indirect channels, where severe competition for products such as printers,...