Hewlett-Packard (HP) stock sank to a 10-year low on Wednesday after its CEO said it would take time to turn around the company that built its fortune on printers and computers.
An analyst day at the company’s headquarters in Northern California opened with HP boss Meg Whitman laying out her vision for reviving HP and projecting earnings for the year that fell far short of previous expectations.
HP shares plunged 12.96 percent to end at US$14.91 on the New York Stock Exchange, the lowest since November 2002.
“HP has a powerful set of assets, a culture of engineering innovation and a trusted brand,” Whitman said in a release. “Now, we have to focus on bringing our incredible assets together to deliver for our customers, employees and shareholders.”
Whitman told analysts that HP made progress during the past year stabilizing the business, which has been thrown off balance by changes in leadership, and that a foundation was laid for a “multiyear turnaround.”
HP said its focus includes capitalizing on trends in data security and shifting computing into the Internet “cloud.”
HP is on track to complete its restructuring by the end of 2014 and its revenue would be growing in line with the US GDP by 2016, according to Whitman.
HP anticipated revenue for fiscal 2013 would decline during what Whitman referred to as a “fix and build year.”
The company said its profit for the fiscal year would be between US$3.40 and US$3.60 per share, far below analysts’ expectations of US$4.18 a share.
The market reaction was brutal and Brian White of Topeka Capital markets called the new outlook a “bomb” from the world’s biggest PC maker.
“Given this weak outlook, the stock is selling off, but we believe there remains more downside potential,” White said, adding that HP’s key segment in PCs and printers faces “negative secular trends.”
Despite Whitman’s turnaround efforts, Amit Daryanani at RBC Capital Markers said that “in the near-term, things will get more challenging before they get better.”
HP announced last month that its job cuts under a major restructuring program will total about 29,000.
In a regulatory filing, HP said the cuts will be made through its 2014 fiscal year.
The cuts are part of an effort by Whitman to turn around a giant company hurt by a shift away from traditional PCs.