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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 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.

"Well, we didn't have anyone in line that got shot waiting for our system." -- Nintendo of America Vice President Perrin Kaplan
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