Hewlett-Packard Co (HP) forecast fiscal second-quarter profit that fell short of analysts’ estimates, as consumers curtail PC purchases, shifting computing tasks to smartphones and tablets made by rivals.
Profit before some items in the period that ends in April will be US$0.88 to US$0.91 a share, HP said on Wednesday. That was less than the US$0.95 average analyst estimate, according to data compiled by Bloomberg.
Sales in the PC group dropped 15 percent to US$8.87 billion in the period that ended in January, as consumers held off on buying new machines in the first full quarter under CEO Meg Whitman. Revenue from servers, printers and storage gear also declined, suggesting that Whitman’s attempts to reverse a sales slump are not yet taking hold.
“Headwinds will likely continue through the second quarter,” Abhey Lamba, an analyst at Mizuho Securities USA Inc, said in a research note on Wednesday. “The company is again being conservative for the second quarter and remains cautious.”
On a conference call after the report, Whitman said the company’s PCs, printers and information-technology services had not been compelling enough to attract customers’ spending.
“For years, we’ve been basically running our business in silos,” she said. “We underinvested in innovation.”
First-quarter sales of home computers fell 25 percent and business-PC revenue was down 7 percent, the Palo Alto, California-based company said. Consumers may wait to buy new PCs until Microsoft Corp releases its Windows 8 software later this year. Rival Dell Inc earlier this week forecast lower sales for the current period amid tepid demand from consumers and governments.
HP’s printer group also has too many unsold products sitting in dealers’ inventory, Lamba said in an interview. Sales in the printer group declined 7 percent to US$6.26 billion.
“It’s not going to be a one-year turnaround,” he said.
In the first quarter, which ended Jan. 31, profit excluding some items declined to US$0.92 a share, compared with analysts’ average estimate of US$0.87.
Net income fell 44 percent to US$1.47 billion, or US$0.73 a share, from US$2.61 billion, or US$1.17 a share, a year earlier, HP said.
Sales fell 7 percent to US$30 billion. Analysts had projected US$30.8 billion.
Whitman said she was attacking inefficient product-design and sales processes and investing in research and development to try to make the company more competitive.
When the company reported fourth-quarter results on Nov. 21, it forecast profit for fiscal 2012, which began on Nov. 1, of at least US$4 a share — lower than analysts’ expectations of US$4.58. The company said on Wednesday it was maintaining its full-year forecast.
Since she took the helm, Whitman has been seeking to halt the missed sales forecasts and strategy shifts that marked the tenure of her predecessor, Leo Apotheker, who resigned on Sept. 22. She has also said she will eschew big acquisitions. Apotheker left after a year-and-a-half of management turmoil, falling computer demand and reduced growth forecasts. Whitman told analysts a complete turnaround of results could take two years or more.