NEW YORK - Hewlett - Packard Co. is preparing them to weaker financial results this year as it realigns its services business to undo what its CEO described as years of neglect under his predecessor.
For too long, short term results-based undertaking rather than expand in high-margin areas, such as help companies transform their systems to new technologies, CEO Leo Apotheker, said Tuesday.
Fixing that will cost the company in the short term, he said. HP cuts its gains throughout the year forecast Tuesday. Investors responded by sending its stock down more than 7% to a minimum of two years.
Apotheker, who became CEO in November, said HP has never responded to a strategy statement years ago to focus on areas of high margin.
"We will now execute the strategy", said Apotheker.
That includes finding an executive vice president of services, which will report directly Apotheker, he said.
"View us these as logical, especially proactive and positive changes for the expansion of long-term operating profits," said Jayson Noland, an analyst with Robert w. Baird & Co.
Although it has no reference to his predecessor by name, Apotheker implied that he inherited the problems of Mark Hurd, who was forced in August following a survey on his relationship with a former contractor. Hurd, who now works for rival Oracle Corp. as co-chair, refused comment by an agent.
For consumers, HP is known as a manufacturer of printers and personal computers, but it has experienced rapid growth by providing networking and information technology services to other businesses. Under Hurd, HP more than doubled its portfolio of services with the acquisition of electronic data for $ 13.9 billion systems. HP became the second company in the market behind IBM Corp..
Services now account for 28 per cent of income from HP, almost as much as the PC business.
Apotheker move transform services division is indirect acknowledgement of frequent criticism that the work of EDS has been too focused on the tasks of the low margin. In the world of services, those which may include basic services and tasks of outsourcing, such as the installation of new computers and servers and the management of enterprise data centers.
IBM has often been said that its advantage lies in its advanced software and the expertise of deep in the industry, enabling it to pursue more profitable work such as analytics and build networks of transport and electric networks "smart."
HP, large PC manufacturer the most, is also struggling in the PC business. Tablet iPad of Apple Inc. is cutting in PC sales more deeply that PC manufacturers had planned. Consumers are also withheld on upgrades of PC because of the economy, said Apotheker, while business sales go well.
"There is no doubt that the impact of the tablets was slowing the rate of renewal of the PC.". I think that this is a trend that will ebb away. I think that the PC will continue to be the main computer device in many homes, "Apotheker said in an interview."
Tablets cannot be any PC can do, and the iPad must be connected to a PC regularly, backups and software updates.
HP said that it is still on track to launch its first non-Windows Tablet, the TouchPad, this summer, based on the software, that he received when it purchased Palm Inc. last year.
The company announced its quarterly results one day very soon after leaked memo from the Apotheker has warned that the company has been preparing them to "an another quarter tough" in the period from May to July. Apotheker, said the memo to management necessary for "watching every penny and minimize any hiring."
The company is now forecasting income, excluding non-recurring items, $1.08 per share and revenues 31.1 billion of $ 31.3 billion for the current quarter, which ends in July. Wall Street analysts were on average, the search for earnings of $1.23 cents per action and 31.84 billion in revenue, according to FactSet.
For the full fiscal year, which ends on October 31, HP now expects earnings of $5 per share. It is far from its previous predictions of 5.20 m $ to $5.28 per share and below the expectations of Wall Street $ 5.24.
The company also lowered its range of revenue from the exercise orientation slightly to 129 billion to $ 130 billion. In February, he had planned to $ 130 billion to $ 131.5 billion. Analysts predict 130.47 billion
HP stock fell $2.89 or 7.3%, to close Tuesday at $36.91. Earlier, the stock reaches a minimum of two years of $36.04.
HP, which is based in Palo Alto, California, reported earnings of 2.3 billion dollars, or $1.05 per share, for the three months ended April 30. Located 2.2 billion, or 91 cents per share, a year earlier.
Excluding special items, HP earned $ 1.24 per share in fiscal year second quarter, over $1.21 per share that analysts surveyed by FactSet waited.
Income rose 3% to 31.63 billion dollars, is over expectations of Wall Street of 31.55 billion slightly.
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