NEW YORK The move, announced Tuesday as part of the biggest reshuffling of the Dow Jones Industrial Average since April 2004, delivers another blow to CEO Meg Whitmans quest to revive growth at the storied personal computer maker.
Hewlett-Packards shares have declined for three straight years as consumers have abandoned PCs in favor of smartphones and tablets. Whitman last month scrapped her forecast for a return to revenue growth in 2014 amid lackluster demand for hardware and services, as well as aggressive price cuts. The departure from the Dow reflects those challenges, according to Shannon Cross, an analyst at Cross Research.
Its certainly not something you want to happen on your watch, Cross said in an interview Tuesday. The Dow is more about symbolism and prestige than anything else.
Hewlett-Packard fell less than 1 percent to $22.27 at the close in New York. Its stock price is third-lowest in the Dow index.
HP remains confident that we are making progress in our turnaround, Michael Thacker, a spokesman for the Palo Alto, Calif.-based company, said in an email. We have delivered financial performance in line with or better than our expectations throughout this fiscal year, and remain focused on delivering shareholder value.
PC shipments fell in the second quarter for a fifth straight period, sliding 11 percent, market researcher Gartner Inc. said in July. Consumers are increasingly opting for tablets instead of traditional desktops and notebooks, and businesses are keeping old machines longer.
For the fiscal third quarter, which ended in July, Hewlett- Packards sales fell 8 percent to $27.2 billion, missing analysts average estimate of $27.3 billion, according to data compiled by Bloomberg. Sales in the business group that includes PCs fell 11 percent to $7.7 billion.
Goldman Sachs, Visa and Nike will be added to the Dow. Bank of America and Alcoa are being removed along with Hewlett-Packard.
Once HP is gone, four technology companies will remain: Cisco Systems, Microsoft, Intel and IBM Corp.
HP is one of the Treasure Valleys largest employers, with a campus at 11311 Chinden Boulevard in Boise that employs an estimated 3,700 people, about half of whom work in the Imaging and Printing Group.