Profit excluding some items will be 88 cents to 91 cents a share for the period that ends in April, Palo Alto, California- based Hewlett-Packard said today in a statement. That fell short of 95 cents, the average analyst estimate, according to data compiled by Bloomberg. Shares slipped in extended trading.
Sales in the PC group declined 15 percent in the first quarter, the company said, as consumers held off on buying new machines. The results suggest that Chief Executive Officer Meg Whitman’s attempts to reverse a sales slump aren’t yet taking hold. Rival Dell Inc. yesterday forecast a sales decline for the current quarter amid tepid demand from consumers and governments.
“All these segments are going to have headwinds,” said Abhey Lamba, an analyst at Mizuho Securities USA Inc. in New York, who began coverage of Hewlett-Packard on Feb. 8 with a “neutral” rating.
Consumers may wait to buy new PCs before Microsoft Corp. releases its Windows 8 software later this year. Hewlett- Packard’s printer group also has too many unsold products sitting in dealers’ inventory. And shifting to more profitable services will take time, he said.
“It’s not going to be a one-year turnaround,” Lamba said.
First-Quarter Profit
In the first quarter, which ended Jan. 31, profit excluding some items declined to 92 cents a share, compared with analysts’ average estimate of 87 cents. Sales fell 7 percent to $30 billion. Analysts had projected $30.8 billion.
Whitman is seeking to halt the missed sales forecasts and strategy shifts that marked the tenure of her predecessor, Leo Apotheker, who resigned Sept. 22.
Whitman has said she will attempt to rebuild Hewlett- Packard’s balance sheet and invest in research and development. She also said she’ll eschew big acquisitions and strategy overhauls that characterized her predecessor’s tenure. Apotheker left in September after a year and a half of management turmoil, falling computer demand and reduced growth forecasts.
Whitman reversed a proposal, floated under Apotheker, to jettison Hewlett-Packard’s $39.6 billion PC business. She’s also opted to turn the WebOS operating system into an open-source project, letting outside programmers tinker with the code and use it in their own electronics devices.
Annual Forecast
When the company reported fourth-quarter results Nov. 21, it forecast profit for fiscal 2012, which began Nov. 1, of at least $4 a share; analysts had expected $4.58. Whitman said she expected a “tough” year ahead and that she would eschew big acquisitions while investing in research and development.
Hewlett-Packard shares dropped to $28.46 in extended trading after the report. They had fallen 1.4 percent to $28.94 at the close in New York. The shares have climbed 12 percent this year after losing 39 percent of their value in 2011.
Companies are buying packages of servers, storage and networking gear from Hewlett-Packard and Dell, which are under- pricing competitors, Peter Misek, an analyst at Jefferies & Co., said in a Feb. 15 report to clients. He has a “buy” rating on Hewlett-Packard.
U.S PC shipments declined last year for the first time in a decade and the industry is wrestling with a shortage of hard drives after flooding crippled factories in Thailand last year. Meanwhile, Apple Inc.’s iPad is cutting into PC sales, and Lenovo Group Inc. is gaining market share.
Hewlett-Packard, Dell and other PC makers are counting on a new crop of thin-and-light laptops called ultrabooks to spur sales.
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