February 22, 2011 / 9:31 PM / 7 years ago

CORRECTED - UPDATE 2-HP trims 2011 sales forecast, shares deflate

(Corrects year-ago quarterly profit comparison in sixth paragraph to “$2.3 billion, or 93 cents a share” from “$2.5 billion, or $1.10 a share.” The error first appeared in HP (UPDATE 1).)

* HP’s Q1 rev disappoints, trims full-year sales

* Consumer demand flaccid

* Shares dive 8 pct

By Gabriel Madway

SAN FRANCISCO, Feb 22 (Reuters) - Hewlett-Packard Co (HPQ.N) trimmed its 2011 revenue projections on falling consumer demand for its personal computers, sending its shares nearly 8 percent lower despite exceeding profit expectations.

Sales from its personal systems group, encompassing PCs as well as new devices such as tablets, slipped 1 percent after growth stayed flat in Europe, Africa and the Middle East. Revenue from its services arm slid 2 percent.

The limp performance overshadowed a beat on fiscal first-quarter profit, driven in part by cost discipline and lower component costs that had also boosted rival Dell Inc’s DELL.O margins. [ID:nN14107794]

“They did a good job on the bottom line, a little bit light on the revenue side. Services and software were a bit weaker than expected,” said Gleacher & Co analyst Brian Marshall.

The company raised its forecast for fiscal 2011 non-GAAP earnings, predicting a profit of $5.20 to $5.28 a share. But it trimmed its revenue outlook to a range of $130 billion to $131.5 billion, from a previous $132 billion to $133.5 billion.

The world’s largest technology company by revenue reported net income of $2.6 billion for the fiscal first quarter ended Jan. 31, or $1.17 a share, up from $2.3 billion, or 93 cents a share, a year earlier.

Excluding items, HP earned $1.36 a share, better than the average analyst estimate of $1.29 a share, according to Thomson Reuters I/B/E/S.

Revenue rose 4 percent to $32.3 billion, but fell short of Wall Street’s estimate of $32.96 billion.

Shares of Palo Alto, California-based HP closed almost 1 percent lower at $48.23 on the New York Stock Exchange and fell further to $44.50 in extended trading. (Additional reporting by Noel Randewich; Writing by Edwin Chan; Editing by Richard Chang)

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