HP chief warns of 10% drop in earnings next year
SAN FRANCISCO — Hewlett-Packard Co. is expecting earnings to fall by more than 10 percent next year as CEO Meg Whitman struggles to fix a wide range of problems in a weakening economy.
Whitman delivered the disappointing forecast on Wednesday at a meeting that the ailing Silicon Valley pioneer held for analysts and investors. The gathering gave her the opportunity to convince investors that she has come up with a compelling strategy for turning around HP one year after being named CEO.
She said she inherited a bloated company that has not been innovating quickly enough in any of its divisions, which span from personal computers and printers to software and data storage. The headaches are so severe that Whitman believes HP's revenue growth might not accelerate again until 2015.
“It is going to take longer to right this ship than any of us would like,” Whitman said.
Following the remarks, HP's stock price shed $1.19, or 7 percent, to $15.94 in afternoon trading. The sell-off shoved HP's shares to their lowest level in nearly a decade. The stock has fallen by about 30 percent since the former CEO of eBay Inc. took over HP last September.
HP, which is based in Palo Alto, Calif., expects its earnings for fiscal 2013 to range from $3.40 to $3.60 per share, after stripping out charges for layoffs and other accounting measures unrelated to its ongoing business. The projection translates into an 11 percent to 16 percent drop from the adjusted earnings of $4.06 per share that HP expects to deliver in its current fiscal year ending Oct. 31.
Whitman's forecast for next year caught investors off guard because analysts, on average, had predicted HP's adjusted earnings would be $4.17 per share.
Next year's revenue also will decrease, although HP did not say by how much. The biggest problems will be concentrated in HP's technology consulting division, where revenue is expected to fall by 11 percent to 13 percent next year. Technology consulting also faltered during the past year, prompting HP to absorb an $8 billion charge to account for the diminished value of Electronic Data Systems, which HP bought for $13 billion in 2008.
In an effort to maintain its profits, HP is in the process of eliminating 29,000 jobs through employee buyouts, attrition and layoffs.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Steelers clinch playoff berth with win over Chiefs
- Starkey: Chryst a miserable failure at Pitt
- Fatal fire under investigation in New Castle
- Groom cited at Farmington wedding reception being filmed for reality TV show
- Ex-Penguins defenseman Niskanen still miffed by coaches’ firings
- NYPD: Cop ambush killer told passers-by to watch
- Pitt players support Rudolph for job
- Daily Courier roundup: Ice Miners win 20-round shootout
- Pitt football fights to overcome steppingstone status
- Obama says Sony hack not an act of war
- Police investigate alleged institutional sexual assault at Pine youth treatment center