HP Profit Falls As Charges Hit Results
SAN FRANCISCO (AP) — Hewlett-Packard Co. was hurt in the latest quarter by declines in several of its key businesses and heavy restructuring charges, a sign of the challenges confronting new CEO Meg Whitman.
Net income plunged 91 percent to $239 million, or 12 cents per share, in the quarter ended Oct. 31. That's down from $2.54 billion, or $1.10 per share, in the same period a year ago.
Excluding items, HP earned $1.17 per share. Analysts polled by FactSet expected $1.13 on that basis.
Meanwhile, revenue fell 3 percent to $32.12 billion. Analysts expected $32.05 billion.
HP shares fell 26 cents, or less than 1 percent, to $26.60 in extended trading, after the results were reported. In Monday's regular trading session, the stock fell $1.13, or 4 percent, to $26.86.
Wall Street believes HP's outlook leaves something to be desired. The company's forecast was lower than most analysts' targets. HP said it was being "cautious," without immediately elaborating on the reasons for why.
Analyst Brian White with Ticonderoga Securities called the outlook "weak" but said the stock has some appeal in investors because of its previous declines. Indeed, the stock has fallen 40 percent since CEO Mark Hurd was ousted last year in an ethical scandal.
"HP has valuation on its side and expectations are low, however, we believe this turnaround story will take time to play out and the darkening macroeconomic environment is only likely to hinder this cause," White wrote in a note to clients.
The profit decline in the latest quarter was caused in large part by $3.3 billion in charges for HP's earlier decision to kill its tablet and smartphone businesses, as well as other write-downs and acquisition costs. Revenue in three of HP's biggest divisions — personal computers, printers and ink, and servers and networking — fell as well.
Whitman faces a real test as she attempts to pull together a conglomerate beset by growing pains and managerial strife. She is HP's third CEO in a year and a half. Though HP is the world's largest information technology company by revenue, the company has had a hard time deciding whether it wanted to grow even bigger or start getting smaller.
Hurd's successor Leo Apotheker was ousted this year over his botched handling of key initiatives, particularly HP's plans to try and sell or spin off its PC division. Those plans leaked early to the press. Whitman has now decided to keep the PC division.
For the fiscal first quarter, HP expects earnings of 83 cents to 86 cents per share, excluding items. That was far less than the $1.11 per share that analysts expected on that basis.
For the full fiscal year, HP expects earnings of at least $4 per share, excluding items. Analysts expected $4.53 per share on that basis.