Hewlett-Packard Shares Take a Hit as Sales Miss Targets
Hewlett-Packard reported revenue that was lower than expected and trimmed its full-year outlook on Tuesday, and the company's shares dropped sharply in extended trading Tuesday.
The world's largest technology maker reported sales of $32.3 billion in its fiscal first quarter, a 4 percent increase from $31.177 billion last year but short of the $32.96 billion that analysts expected, according to consensus estimates from Thomson Reuters.
HP Chief Executive Leo Apotheker pointed to weak demand among consumers for the sales shortfall.
Sales from its personal systems group, encompassing PCs as well as new devices such as tablets, slipped 1 percent after growth stayed flat in Europe, Africa and the Middle East. Revenue from its services arm slid 2 percent.
"We had a couple of weaker areas in the business this quarter—one is the consumer side of the PC business, but that's a market-driven event," Apotheker told CNBC. "And on our services side we need to get a little bit better on our value added services, but in general we have a very strong portfolio."
Shares of HP plunged more than 10 percent in late trading. Get after-hour quotes for Hewlett-Packard here.
The stock, a component of the Dow Jones Industrial Average, finished Tuesday's regular Nasdaq session less than 1 percent lower at $48.23.
The company raised its forecast for fiscal 2011 non-GAAP earnings, predicting a profit of $5.20 to $5.28 a share. But it trimmed its revenue outlook to a range of $130 billion to $131.5 billion, from a previous $132 billion to $133.5 billion.
HP reported a profit excluding one-time items of $1.36 a share in the quarter, versus $1.07 a share a year earlier. The Thomson Reuters estimate put HP's earnings excluding items at $1.29 on a per-share basis.
HP's net income, which includes special items, came in at $2.6 billion, or $1.17 a share, up from $2.5 billion, or $1.10 a share a year earlier.
Timing on HP Tablet, More From Apotheker
Timing for Tablet Unchanged, Apotheker Says
The fiscal first quarter was Apotheker's first full one with HP. The CEO began November 1 after the stunning ouster of Mark Hurd in August.
HP's report comes out its prepares for its most aggressive salvo at the wireless device market —the software-powered TouchPad. That market is dominated by the likes of Apple and Google.
Apotheker told CNBC that the company has made no changes to its plans on when the device will become available for purchase, currently set for some time this summer.
"We haven't changed our plans. We stick to our plans. We have an exciting tablet coming out. Actually we have an exciting sweep of Web OS products coming out, and we haven't changed our plans to release them any sooner."
The tablet, unveiled alongside two new smartphones, emerged from HP's $1.2 billion acquisition of Palm, a pioneer in mobile computing that had languished in the face of Apple's dominance.
Apotheker also said that HP would consider making acquisitions if necessary in order to boost the size of its software business.
He added that the company will boost its efforts in large and emerging markets such as China, India, Brazil and Russia.
"I want to affirm once again that we can do much better in these countries," he said. "We will be putting together our heads to out-execute anyone else in these markets."
Correction: An earlier version of this story incorrectly stated Hewlett-Packard's year-ago earnings excluding one-time items as $1.10 a share rather than $1.07.