updated 06:10 pm EST, Tue February 22, 2011
HP home PCs decline in Q1, get shaky outlook
HP signaled potential problems with its home business both in its past quarter and in the near future. The Personal Systems Group, which covers its PCs and mobile devices, saw its winter revenue dip one percent year over year in a market where others were growing. It specifically singled out the home as sales of regular PCs, like the Pavilion line, plunged 12 percent.
"We assumed that we would deliver growth in consumer [computers]," CEO Leo Apotheker said. "Unfortunately, this did not play out in Q1 due to softness in the older consumer PC market."
The company also didn't expect this performance to turn around for the ongoing quarter, which started in February and ends in April. It didn't see earnings going about $1.21 per share, and revenue of up to $31.6 billion, where the analyst consensus had expected $1.25 per share and $32.6 billion in revenue. HP again blamed expected weaknesses, both in the home PC business but also in services.
While the company as a whole saw its net earnings jump a healthy 17 percent year over year, the results suggested HP was likely to lose market share to faster-moving rivals that were growing. NPD data published today had Apple's Mac sales up 20 percent year over year in January. The growth could see Apple close the gap in the US at the expense of HP, although whether it gains in standing will also depend on how usual rivals Acer, Dell and Toshiba compete.
HP didn't narrow down causes for the drop but has been a minor victim of the iPad and other tablets by leaning so heavily on its Mini netbooks and low-end Pavilion notebooks. It did expect an improvement later this year once webOS devices like the TouchPad and Pre3 are in the market. Apotheker stressed that the upcoming March 14 event would have a special role to play.