) CEO Meg Whitman rang an alarm for investors as she announced that
fiscal 2013 earnings may be expected to plunge over 10%.
The discouraging outlook also included possibilities of
declining revenues in every business division, apart from software.
The announcement battered the company's shares, which slumped 13.0%
to close at $14.91 on Wednesday, the lowest level since November
The company expects non-GAAP profit in the range of $3.40 to
$3.60 per share for fiscal 2013. Moreover, in GAAP terms, HP is
expecting $2.10 to $2.30 a share after charges of $1.30 per
Whitman said that investors should not expect a recovery until
fiscal 2014, when current investments would generate returns. She
also said that high executive turnover in recent years have
dampened HP's business.
HP is particularly bearish on the enterprise business. The
company projects enterprise services revenue to decline 11.0% to
13.0% during fiscal 2013. Operating margins are estimated to range
from break even to 3.0%.
Some industry experts commented that the competitive PC market
has pulled down its margins significantly and reduction in IT
spending is another headwind. Also, a declining personal computer
business has largely affected HP's business activity.
HP's outlook looks particularly bleak when compared with that,
), which raised its full-year 2013 earnings outlook.
Hewlett-Packard's third quarter 2012 earnings per share exceeded
the Zacks Consensus Estimate, but revenues declined compared with
the year-ago period. Results were negatively impacted by
macroeconomic factors, lower order renewal, a massive write-down
charge and low bookings. However, we believe that the restructuring
initiatives taken up by the company is encouraging and should
improve margins going forward.
During the quarter the company took some major steps to focus on
strategic priorities. It is also taking innovative steps to manage
costs, drive growth and improve the health of its balance
On the other hand, the printer business looks challenging, with
competitors such as
) regularly coming up with new products. In addition, the
increasing availability of low-cost refilling options for toners
and cartridges poses a threat for HP. Also, margins in the services
business are likely to remain weak this year and the macroeconomic
trends continue to work against it.
Currently, HP has a Zacks #3 Rank, implying a short-term Hold
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