HP, Oil Prices Sink Stocks

Hewlett-Packard’s pre-trading announcement of unexpectedly low third-quarter earnings set a bleak tone for stocks Thursday as all major indexes began and ended in the red.

Missing Wall Street estimates by seven cents, HP reported Q3 earnings of 24 cents per share. The company announced its Q3 results nearly a week earlier than scheduled, and blamed the disappointing earnings on poor performance from its high-end enterprise server and storage business. HP officials also revised downward fourth-quarter earnings estimates.

The impact on HP shares and the markets was unequivocally negative, as HP plummeted to as low as 16.08 from Wednesday’s close of 19.52, a drop of nearly 18 percent. Shares rebounded somewhat in the afternoon to finish at 16.95.

While HP is listed on the New York Stock Exchange, its biggest victim Thursday was the tech-heavy Nasdaq, which fell 26.6 points, or 1.5 percent, to 1756. The Dow Jones also never got traction, finishing down 124 points, or 1.2 percent, to 9815. The S&P 500 lost 12.6 points, or 1.2 percent, to close at 1063.

The HP bombshell — coupled with news that crude oil futures reached an all-time high closing price of $45 per barrel — overshadowed some of the first good economic news this summer: Retail sales rebounded in July from a steep drop in June, while unemployment claims in early August reached a five-week low.

Despite Thursday’s dismal course, investors likely will await trading on Friday with some extra interest. After Thursday’s closing bell, search engine superpower Google, Inc. announced its long-awaited initial public offering’s Dutch auction will begin at 9 a.m. Friday. Google officials say they expect to announce the IPO’s price next week.

Also, computer maker Dell announced second-quarter earnings of 31 cents per share, meeting analyst forecasts. The company also said that Q3 revenues and profits should meet expectations. Dell finished trading Thursday down 40 cents, or 1.2 percent, to 33.17.

Among HP’s main competitors, storage systems vendor EMC ended trading Thursday at 9.48, a decline of 66 cents, or 6.5 percent, while IBM dipped 1.48, or 1.8 percent, to 82.21.

Software giant Microsoft fell 53 cents, or 1.9 percent, to 26.88 in Thursday’s session. Router maker Cisco Systems tumbled 50 cents, or 2.7 percent, to 17.79. Server vendor Sun Microsystems dropped 18 cents, or 5.2 percent, to 3.31.

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