Was the fax machine in Office Space an H-P?
Hewlett-Packard’s Q1 earnings fell by 44% and the company’s Q2 guidance was weak, sending shares lower on Thursday. Net income fell from $1.17 per share last year to $0.73. Excluding items, earnings of $0.92 per share topped the average analyst estimate of $0.87. Revenue fell by 7% to $30 billion, also missing consensus, as personal systems sales fell 15%, due in part to the hard drive shortage caused by flooding in Thailand.
The outlook for Q2 did little to appease investor concerns about H-P as management guided earnings to a range of $0.88-0.91 per share while analysts were looking for $0.95. CEO Meg Whitman, who took over the top position last year, asked investors to be patient. She said, "If you look at business history and you look at companies which have gone through the kind of turnaround that we’re leading HP through right now, these things are not quick…It took us a while to get into the situation in which we find ourselves, It’s going to take us a little while to get out."
She went on to say that the company had become too large to execute on its strategy in a quick and nimble fashion, also pointing to an inefficient supply chain as a source of difficulty for the company. While the guidance may have disappointed investors, one analyst said that the company could be setting up an under-promise/over-deliver situation as it looks to improve its margins and product portfolio in the coming quarter.
Hewlett-Packard (HPQ : NYSE : US$27.05), Net Change: -1.89, % Change: -6.53%, Volume: 70,982,830
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