Hewlett-Packard Co. on Tuesday forecast fiscal first-quarter profit that missed analysts’ estimates amid a continuing slump in personal computer sales.
Earnings excluding some items will be 68 cents to 71 cents a share for the period, which ends in January, the Palo Alto, Calif.-based company said Tuesday in a statement. Analysts on average had estimated profit of 85 cents a share, according to data compiled by Bloomberg.
Chief Executive Officer Meg Whitman is paring product lines and cutting staff to make the supplier of PCs, printers and data center gear more competitive. The company, once a hotbed of invention and the world’s biggest PC maker, has suffered from declining sales and has been late to develop mobile and cloud computing products.
“They have a lot of deep-rooted problems,” said Eric Maronak, chief investment officer at Victory Capital Management Inc. in New York, which owns Hewlett-Packard shares. “A lot of it is self inflicted.”
The shares fell in early trading. Hewlett-Packard is down 48 percent this year.
The net loss in the fiscal fourth quarter was $6.85 billion, or $3.49 a share, compared with net income of $239 million, or 12 cents, a year earlier.
Results included an impairment charge of $8.8 billion from the acquisition of Autonomy Corp., due to “accounting improprieties, disclosure failures and outright misrepresentations” that happened before Hewlett-Packard purchased the company.
Profit excluding some items was $1.16 a share, topping analysts’s average $1.14 estimate.
Fourth-quarter sales fell to $30 billion. Analysts had projected revenue of $30.4 billion.
Hewlett-Packard, which gets more than a quarter of sales from PCs, is suffering as consumers and business users increasingly favor smartphones and tablets.
“The environment remains challenging for HP and other technology companies in the space,” said Abhey Lamba, an analyst at Mizuho Securities USA Inc. “HP is unlikely to post revenue growth for a couple of years due to market dynamics in the PC and printing businesses.”
The total PC market will contract by 1.2 percent to 348.7 million units this year, according to IHS iSuppli. That’s the first annual decline since 2001, the market researcher said. Whitman said at the company’s annual investor meeting last month that a turnaround won’t happen anytime soon. At the time, she forecast earnings for the current fiscal year to $3.40 to $3.60 a share, lower than analysts had expected.
She is cutting 29,000 jobs by the end of fiscal 2014 to save as much as $3.5 billion a year. Whitman is also streamlining Hewlett-Packard’s unwieldy line of printers, overhauling technology services to improve profit, and re- entering the tablet computer market in January with the company’s ElitePad. The company is also focusing on products that help run corporate data centers, which yield higher profits than PCs.
The earnings report came less than a week after Dell Inc. reported fiscal third-quarter revenue fell 11 percent and PC sales dropped 19 percent, amid competition from Apple Inc.’s iPad and other tablet computers.
“HP is faced with many of the same secular and cyclical headwinds as Dell,” albeit with a lower percentage of sales from PCs, Jayson Noland, an analyst at Robert W. Baird & Co., wrote in a research report.
