HP's slumps deepens in second quarter as earnings fall 32%

Thursday 23 May 2013 18.29
Hewlett Packard reports seventh quarterly loss of revenue in a row
Hewlett Packard reports seventh quarterly loss of revenue in a row

Hewlett-Packard's slump is deepening as the world's largest personal computer maker scrambles to meet the growing demand for more versatile and less expensive mobile devices.

The latest evidence of Hewlett-Packard's continuing downfall came in a quarterly earnings report released last night.

The results included the seventh consecutive decline in HP's quarterly revenue compared with the same period the previous year.

HP's 10% decrease in revenue during the three months ending in April was the largest drop so far during the slump.

Most of the erosion has occurred under the leadership of Meg Whitman, a former CEO at eBay who was hired to run HP in September 2011.

Whitman has repeatedly warned that HP's revenue might not start growing at an acceptable rate for another year or two as she cuts costs, overhauls the company's product line and pushes into more profitable niches in business software, data analysis and storage and technology consulting.

In a statement, she reiterated that the company remains in a "multi-year journey."

"I am encouraged by our performance in the second quarter, and I feel good about the rest of the year," Whitman said.

In a sign of optimism, HP predicted its earnings for the current quarter ending in July will be a slightly better than analysts have been anticipating.

Excluding certain items, the California company forecast earnings ranging from 84 cents to 87 cents per share. Analysts, on average, had projected 83 cents per share, according to FactSet.

Investors seemed to interpret the guidance as a sign that HP's cost-cutting measures imposed by Whitman are starting to pay off, even as the company's sales droop.

HP earned $1.1 billion, or 55 cents per share, during its most recently completed quarter. That was down 32% from $1.6 billion, or 80 cents per share, last year.

If not for certain items unrelated to its ongoing business, the company said it would have earned 87 cents per share in its fiscal second quarter. That figure topped the average estimate of 81 cents per share among analysts surveyed by FactSet.

HP's revenue totaled $27.6 billion - about $400m below analyst projections.