Hewlett-Packard chief executive Meg Whitman said in a conference call with analysts that HP’s financial turnaround continues even as the company reported weaker-than-expected third-fiscal quarter earnings and revenues.
But investors may be wearing a little thin on patience. HP’s stock dipped 0.75 percent to $25.19 a share in after-hours trading, after the earnings report came out.
Whitman said industry standard systems and personal systems have not turned the corner. But other areas such as storage, software, hardware unit sales in printing, and enterprise services have improved.
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“Overall, I’d say our financial turnaround continues,” she said. “We see a continued weak enterprise spending segment.” She said Europe was challenging and China was soft. Third fiscal quarter revenues were driven by software, enterprise services, and other categories.
She said the company is focused on getting the “right leadership” in place on the executive leadership team. Bill Veghte, chief operating officer, will head enterprise while Dave Donatelli, former head of enterprise, will take on a special assignment. There are no plans to replace Veghte as chief operating officer. Henry Gomez will become the new chief marketing officer, while former CMO Marty Homlish will become chief customer experience officer.
“There are areas that are doing well, and areas that have to improve,” Whitman said.
She said enterprise services signings are strong, but they are mostly renewals. She said the cost structure is more aligned with revenue and that the company will see pockets of revenue growth in 2014, but not an across-the-board revenue improvement. Cathie Lesjak, the chief financial officer, said HP faces extreme pricing pressure in industry standard servers and storage. Itanium, based on Intel’s 64-bit computing architecture, continues to face sales pressure, Lesjak said.
With “tectonc shifts” happening in tech, Whitman said, “There is no questions have to be part of” HP’s financial turnaround. Patrick Moorhead, an analyst at Moor Insights & Strategy, said, “HP has stabilized the ship over the last 18 months and 2013 has been what Meg Whitman said it would be…. a fix and rebuild year. This quarter has been challenging in that both market share and profits have declined where HP held the #1 market share position, PCs and servers. I don’t think it’s a coincidence that both leaders on those businesses no longer run those divisions. The key will be for HP to increase share and profits in PCs and servers at the same time they are building up their cloud, software and services businesses. They’re taking a very differentiated approach to their Converged Cloud, have stabilized services and have a lot of potential in software if they can execute flawlessly on Autonomy and Vertica.”