Hewlett-Packard profit drops on weak PC, ink sales

SAN FRANCISCO -- The Palo Alto, Calif.-based company reported Tuesday that consumer spending on PCs is improving, and business in China was particularly good. Corporations are still being tightfisted, though.

Because of the recession, 2009 is shaping up to be the worst year in nearly a decade for the PC industry. HP, the world's No. 1 PC maker, has been branching out aggressively into other areas, like technology services and computer networking, but the PC business still makes up nearly a third of its revenue.

Sales in HP's PC business eroded 18% in the three months ended July 31, even as the number of units sold ticked up 2%. PC makers have been slashing prices.

HP reported after the market closed that it earned $1.64 billion, or 67 cents a share, in the fiscal third quarter. A year earlier the company made $2.03 billion, or 80 cents a share.

Excluding one-time items, HP earned 91 cents a share, a penny better than the average estimate of analysts polled by Thomson Reuters.

Sales fell 2% to $27.45 billion, slightly ahead of analysts' projections for $27.26 billion.

Revenue from printing supplies was down 13%.

HP shares were down 37 cents to $43.59 in extended trading after closing earlier Tuesday up 85 cents, or 2%, at $43.96.