Whitman sets low bar for HP’s earnings

Hewlett-Packard’s new chief executive Meg Whitman has set a low bar for the technology group’s prospects next year after sharply cutting earnings forecasts, citing restructuring efforts and the global economy.

Ms Whitman acknowledged the recent “dramas” HP had faced, and told the Financial Times that she hoped to leave them behind as the group tackled “some pretty significant macroeconomic headwinds in all three regions, especially in Europe”. She pointed to uncertainty around the euro and the inability of the US Congress to come up with a deficit-reduction plan as factors that would continue to weigh on corporate spending.

The top PC maker by revenues said on Monday that it beat estimates for sales and profit before charges in the fourth quarter but slashed earnings guidance for the year beginning to “at least” $4 per share before charges, compared with analyst estimates of about $4.56.

In the three months to October, HP reported an 89 per cent drop in net income to $239m, or 12 cents a share, after charges mainly to discontinue smartphones and a tablet based on the webOS operating system. Revenue slipped to $32.1bn from $33.3bn.

Ms Whitman, a HP director since January, took over as chief executive in September after the board dismissed Léo Apotheker. Mr Apotheker had missed the company’s own earnings projections for three quarters, and Ms Whitman had been expected to provide lower targets.

She said the new year “will be a reset and rebuilding year”, and that HP would announce the fate of webOS by the end of the month. She added that she thought tablets based on Microsoft’s Windows 8 showed promise.

Ms Whitman said the company was increasing research and development spending overall, investing more in its services arm and looking to replace some PC distribution deals it lost in China after Mr Apotheker said HP might spin off that division.

Ms Whitman said there would be no acquisitions in the next year on the scale of the just-completed $10.6bn purchase of Autonomy, the UK software concern, and that the company would continue with its dividends and a modest share buy-back programme.

On a conference call with investors and analysts, she said that the largest acquisition she could imagine HP making in the coming year would be about $1bn.

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