HP lowers financial guidance with webOS shutdown
HP's stock drops on news it will discontinue webOS and look to spin off its PC group
IDG News Service - After pulling the plug on its webOS phones and tablet computers Thursday, Hewlett-Packard said it expected to be less profitable than expected during its current fiscal quarter, which ends Oct. 31.
The company announced earnings Thursday that were on the low side of analyst expectations, numbers that were largely overshadowed by the company's dramatic decision to pull out of the tablet market altogether and to consider options for either spinning out its PC group or putting it up for sale.
Going forward, HP said that fourth-quarter revenue will be between $32.1 billion and $32.5 billion, and that earnings per share will be in the $1.12 to $1.16 range, excluding charges from the webOS shutdown. The market had been expecting earnings of $1.31 on sales of $34 billion, according to a survey of analysts by Thomson Reuters.
Consumer sales at the group's PC division have been imploding, down 17% year over year, the company said. Although the company posted 9% growth in PC sales to businesses, overall revenue was down 3% for the division, called the Personal Systems Group. If HP were to sell off its PC group, it would be following in the footsteps of IBM, which decided seven years ago that razor-thin PC margins weren't worth pursuing.
In an age of mobile computing, increasingly dominated by companies such as Apple and Google, HP is losing ground. Collectively, consumer sales in the group's PC and printing groups were down 15% year over year, HP said.
On the plus side, HP's enterprise hardware group saw revenue grow 7%, year over year, totalling $5.4 billion. The company's much smaller software group saw revenue rise 20% during the same period, to $780 million.
The shuttering of webOS will cost between $0.61 and $0.68 per share, HP said.
On Tuesday, the Wall Street Journal reported that HP had sold a miserable 10% of the webOS-based TouchPad tablets it had shipped to U.S. retailer Best Buy. "The devices have not met internal milestones and financial targets," HP said in a statement. "HP will continue to explore options to optimize the value of webOS software going forward."
Earnings for HP's third quarter, ended July 31, were $1.10, on revenue of $31.2 billion, up from $30.7 billion in the third quarter of 2010. Both of those numbers were in line with market expectations. Net earnings were $1.9 billion, up 9% from the year-ago figure of $1.8 billion.
HP also confirmed that it will buy analytics software vendor Autonomy for $42.11 per share, a cash deal that some reports have valued at around $10 billion.
HP released some financial information earlier than expected Thursday after media reports of the PC sell-off and Autonomy acquisition surfaced.
Traders didn't like the news. HP's stock (HPQ) closed the day down 6%, trading at $29.14 late Thursday on a down day in the markets. The Dow Jones Industrial Average dropped 3.7% Thursday.
- Disk storage sales gets year-end boost
- Bug bounty operator presses vendors to pick up patching pace
- Server market revenue down 4.4% in Q4
- Steven J. Vaughan-Nichols: Windows 7 lives!
- HP unveils first 64-bit Windows 8.1 tablets with Intel Atom
- HP brings 'couch potato' model to Pavilion line
- Microsoft tries to jumpstart cheap Windows devices with license price cut
- HP reverses decline in PC sales, claims broad progress in quarter
- HP eyes acquisitions and divestitures, CEO Whitman says
- Intel's new Xeon server chip pushes Itanium closer to end
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- 4 Customers who never have to refresh their PCs again This paper illustrates a common theme: the combination of desktop virtualization and thin client computing helps organizations deliver an up-to-date user experience more...
- Mobile Devices: The New Thin Clients Get essential guidance for understanding the role thin clients plus virtual desktops play in the enterprise today.
- Taking Windows Mobile on Any Device Taking Windows applications mobile has many advantages, but the process of identifying a solution is complex. Learn how to solve this complex problem...
- PaaS - Powering a New Era of Business IT Why PaaS has suddenly become relevant and irresistible to many organizations. Dive into the opportunities and considerations associated with using PaaS from an...
- Redefine Your IT Operations: Remote Office IT Has Never Been Simpler Join us to see why PC Pro named Dell PowerEdge VRTX the "2013 Server of the Year." PowerEdge VRTX may be just what...
- Webinar: Building a Big Data solution that's production-ready Big data solutions are no longer just a nice-to-have. All Hardware White Papers | Webcasts