Hewlett-Packard shakes up management, raises outlook
Hewlett-Packard announced some management changes Wednesday after posting an 8-percent drop in revenue as PC sales continue to slide. However, the company raised its outlook.
CEO Meg Whitman said in a statement, "I remain confident that we are making progress in our turnaround. We are already seeing significant improvement in our operations (and) we are successfully rebuilding our balance sheet."
HP shares dropped 3 percent after the closing bell, following the news.
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HP said former enterprise group head Dave Donatelli, a rising star that Wall Street analysts once considered a candidate for a tech CEO position, will take on a new role focused on identifying early-stage technologies.
Chief Operating Officer Bill Veghte will become executive vice president and general manager of the HP Enterprise Group. And HP is combining its marketing and communications organizations under the leadership of Chief Communications Officer Henry Gomez.
"This is a five-year turnaround with milestones along the way. ... We need to accelerate into the next turn," she said in an earnings call, then alluded to the executive shuffle: "I need to match talent to challenges."
Net income rose to $1.4 billion, or 71 cents a share, in the third quarter, compared with a loss of $8.9 billion, or $4.49 a share, in the year-earlier period.
Excluding items, earnings dropped to 86 cents per share from $1.00 a share a year ago.
Revenue eased 8 percent to $27.23 billion from $29.67 billion.
Analysts had expected the company to report earnings excluding items of 86 cents a share on $27.29 billion in revenue, according to a consensus estimate from Thomson Reuters.
The declining computer market has been one problem for HP—the PC segment was down for the sixth straight drop—but the company has also had trouble getting the traction in the storage and networking businesses that some of its competitors have.
HP said PC revenue compared with the year-ago period was down 11 percent; that for printers down 4 percent; servers, storage and networking down 9 percent; business services down 9 percent; financial services down 6 percent; and software up 1 percent.
HP raised its outlook: It now expects adjusted full-year earnings of $3.53 a share to $3.57 a share. It had previously expected adjusted earnings of $3.50 a share to $3.60 a share.
The company forecast net income of $2.67 a share to $2.71 a share, versus a prior range of $2.50 a share to $2.60 a share.
In the earnings call, Whitman said year-on-year revenue growth was "unlikely," citing weakness in the enterprise unit due to "extremely competitive pricing" for servers and storage.