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HP expects good news in fiscal 2014

HP was once one of the most profitable and stable companies in the technology and computer industry. The company's fortunes have changed as more consumers move away from traditional desktop and notebook computers to tablets and smartphones. HP CEO Meg Whitman issued a warning yesterday of an unexpectedly severe decline in earnings for fiscal 2013. 
The announcement warned investors and analysts that revenue would fall in every single HP division except software. The decline in revenue sent shares in HP plunging to a nine-year low. Whitman has been banking on transforming HP into a significant player in the enterprise computing environment to take on both IBM and Dell.
Analysts on Wall Street hoped for better signs of progress on Whitman's plan to turn the ailing computer giant around. Whitman told investors that signs of recovery for HP would become visible in fiscal 2014 when the company's investments begin to pay off. Blame is placed on an unexpected executive turnover during the past several years as a reason for delaying the turnaround at HP.
"I was surprised that nothing new was really said in terms of strategy, and the problem here is there is lack of investor confidence in the current strategy," said Shaw Wu, an analyst with Sterne Agee.

HP CEO Meg Whitman [Image Source: Silicon Angle]
On Wednesday, HP's stock price declined by 13% marking the largest single-day decline since August of 2011. HP's enterprise services division is looking at a particularly dark outlook. Revenue from HP's enterprise services division is expected to decline between 11 and 13% for fiscal 2013 while barely turning a profit. Reuters reports that operating margins for the enterprise services division will be somewhere in the range of 0 to 3%.
"The single biggest challenge facing Hewlett-Packard has been changes in CEOs and executive leadership, which has caused multiple inconsistent strategic choices, and frankly some significant executional miscues," Whitman told the investor conference in San Francisco.
"This is important because as a result it is going to take longer to right this ship than any of us would like," she added.

Sources: Reuters, HP

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By retrospooty on 10/4/2012 9:00:30 AM , Rating: 4
So a decade of piss poor decision making and a revolving door at the CEO chair hiring dimwit after dimwit isnt good for business? Who could have seen that coming?

HP's board needs to go rather than the layoffs and CEO changes.

RE: Amazing
By Apone on 10/4/2012 12:03:17 PM , Rating: 2
You're only criticizing the consumer products division of HP. If you do your homework, you'll learn former CEO Mark Hurd (after taking over Fiorina's shenanigans in 2005) returned HP to profitability during his tenure by focusing on aggressive company cost-cutting, innovation in next-generation data centers, mobile technology, and its printing business.

However, Hurd's eventual demise is his own fault and not HP's. I'm not sure how much expertise current CEO Meg Whitman has in terms of turning a company around but I think HP's board could have snagged someone with more turn-around experience such as Alan Mulally or Carlos Ghosn, or even legendary former GE CEO Jack Welch (granted HP makes it worth their while).

RE: Amazing
By astralsolace on 10/4/2012 12:27:58 PM , Rating: 2
Why did they spend billions of dollars to purchase EDS? Why did they buy Palm? Why did they buy Autonomy?

Hurd's aggressive cost-cutting, including company-wide pay cuts and years of salary freezes drove off all their best workers, especially at HPES (formerly EDS), and the company has been floundering for years.

They purchased Palm just as they were starting to show potential, and then immediately axed all of Palm's plans.

The company's top executives have been looting the company for *years* at this point.

RE: Amazing
By Apone on 10/4/2012 1:32:15 PM , Rating: 2
@ astrasolace

HP bought EDS because one of its main goals was to become the leader in the IT Services business sector, an industry that has long been dominated by rival IBM.

Yeah I agree, the acquisitions of Autonomy and Palm seemed a bit overambitious but those purchases were obviously during a time of HP upper management changes and turmoil.

I'm not denying that aggressive cost-cutting will eliminate top-level talent but it's also not impossible to rise from the ashes as we have seen with the success of Ghosn, Mulally, and Welch.

RE: Amazing
By Trisped on 10/5/2012 2:43:07 AM , Rating: 2
Palm was bought because HP was pushing its printer platform and wanted an OS. Palm was a great buy, giving HP an OS they could use to add more features to their printers.

It was also during the start of the smart phone craze. By purchasing Palm HP would have what it needed to compete with the other heavy weights like Apple. Unlike most Android developers, HP has patents covering a meriade of mobile device technologies. If Apple sued for a GUI element HP could remove the element easily and hit back with a fundamental mobile device patent.

HP was doing pretty well until they brought that idiot from SAP. What I cannot figure out is why the board let him run for so long before cutting him. The guy had run SAP into the ground, they picked him up and he trashes Palm (despite the price premium HP payed for the company) and tried to trash the hardware side of things. This basically would have left HP with printers and business software. SAP was business software, he ran them into the ground, how could the board not see what was going on?

new direction for HP
By Mike Acker on 10/4/2012 10:14:47 AM , Rating: 2
HP needs a New Direction,-- and that would be: Customer Support.

in a market where products have become commodities the best customer support can be a factor in market share

I have a HP 6500a Deskjet. The print driver doesn't work right* and anything scanned or copied or faxed using the document feeder leaves a vertical steak down the center of the page.

I called HP support about the print driver and they demanded money. where i come from the only people who have to pay when the other party makes an error work for Dilbert.

now my plans for the HP 6500 are: Junk barrel.
* I can't scan from my Windows system; only from my Linux box. The Linux box doesn't use the fancy HP device support package.

RE: new direction for HP
By jbwhite99 on 10/4/2012 12:08:49 PM , Rating: 3
Better yet, why are print drivers 500MB? I can't figure out how to write a program that big!

I think people in Palo Alto need to ask what the Q in CompaQ stands for. (COMPAtability and Quality).

making great products
By Nortel on 10/4/2012 9:41:21 AM , Rating: 1
When was the last time HP created a great product? All of their laptops I've used were plastic garbage, desktop computers were as bad as gateway/dell/generic and ipaq devices were clunky and tied down with a MS OS. Their foray into tablets failed catastrophically and now they are releasing the ElitePad which is yet another aluminum gray tablet running garbage windows 8. Add to that the stylus (what is this 1995 again?) and you have yet another failure. I can't see a single glimmer of hope for HP to turn around this black hole of incompetence.

RE: making great products
By bupkus on 10/4/2012 10:50:21 AM , Rating: 2
plastic garbage
as bad as gateway/dell/generic
and ipaq devices were clunky and tied down with a MS OS
tablets failed catastrophically
yet another aluminum gray tablet running garbage windows 8
Add to that the stylus
yet another failure
black hole of incompetence
After dissing everyone who is left? So MS's Win 8 is so bad buyers will all switch over to what... Android? Let me guess, do you think gateway, dell and others should use OS X?
Yes, HP is in for a rough ride for the next-- whatever.
I hope they turn this around even if "everyone" is buying tablets. I own 2, one a touchpad and a nexus 7. I like them both. For watching movies or playing Angry Birds my wife like the tp. For straining my eyes I like the Nexus-- truthfully I need new reading glasses.
All I know about purchasing is until Apple drops their prices I won't even consider buying from them. My 2 tablets cost me a little over $350. I got a used Dell laptop, installed an SSD and wow, reborn.
You are so sour on plastic but, okay, that's how you feel. I would like MORE of everything but if you treat your stuff with a little respect and not toss it around it can last a good long time.

By drycrust3 on 10/4/2012 3:20:54 PM , Rating: 3
"I was surprised that nothing new was really said in terms of strategy, and the problem here is there is lack of investor confidence in the current strategy,"

What I find frustrating is the current strategy, e.g. no tablets and no smartphones, is obviously contrary to most people's purchasing expectations for the foreseeable future.
Why is anyone surprised the share price is dropping? I can't understand what justification the current Board of Directors have for not having made a bigger effort in regards to having smartphones and tablets on store shelves.
There are two major problems now facing HP, the first is they need to have a smartphone and a tablet on the market before Christmas (but they won't), and the second is they need to have a mobile operating system which has tons and tons of apps in the application library (and that won't happen either) because apps are now controlling people's purchasing choices. In both cases HP's Board of Directors have known for a long time they needed to do this stuff, and they have deliberately followed a policy of not wanting to go down this path.
Last month we had the HP vice president complaining about the lack of action in this area too.
The most frustrating thing about this is the feeling they could easily have done something earlier so they had at least one of either smartphones or tablets on American store shelves this Christmas.
I'm sure I wrote something like this about this time last year.
Sure, there are technological problems to be solved, but HP has some of the best engineers in the world working for them.

The only surprise here is that Whitman has actually expressed doubts as to the path the Board has taken HP down.

"This is about the Internet.  Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis
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