HP turnaround progressing as profit forecast tops estimates

Gaining Traction

“I don’t like the fact that we saw revenue declines in each of our major segments,” Whitman said during a conference call. “Restoring growth is a priority, and we’re on it.” Hewlett-Packard maintained its outlook for adjusted profit of $3.40 to $3.60 a share for the fiscal year.

Hewlett-Packard reported earnings two days after No. 3 PC maker Dell Inc. reported fiscal fourth-quarter sales and profit that topped analysts’ estimates, reflecting businesses’ demand for servers and software. Dell, which is transforming into a provider of a broad range of technology products, is planning to go private in a $24.4 billion deal.

Whitman said Hewlett-Packard plans to try to poach Dell’s customers during the leveraged buyout process.

“We are going to go after those customers, because we understand perhaps better than most what opportunity instability represents,” she said.

PC Weakness

Both companies are being dogged by a decline in PC demand. Shipments fell 4.9% in the fourth quarter, market researcher Gartner Inc. said. The rise of smartphones, tablets and software that runs via a browser are crimping sales.

There have been some bright spots for Hewlett-Packard in the computer market. Its share of fast-growing ultrathin notebooks was 14% in the fourth quarter, according to IDC, second only to Apple Inc. Whitman has also said the company will eventually re-enter the smartphone market, after discontinuing phones using software from its Palm Inc. acquisition in 2011.

The week before Valentine’s Day, Hewlett-Packard convened its top 1,100 managers in Anaheim, California for a meeting to see the company’s latest products. Starbucks Corp.’s CEO Howard Schultz and Jeffrey Katzenberg, CEO of DreamWorks Animation SKG, spoke at the event.

“The hope is that this is the floor and they’ve gotten a grip on the business,” said Shaw Wu, an analyst at Sterne Agee & Leach Inc. Wu has a neutral rating on the shares. “They’re giving guidance that actually makes sense.”

Bloomberg News

<< Page 3 of 3

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments
comments powered by Disqus