updated 05:10 pm EST, Mon November 21, 2011
HP Q3 2011 results held down by split talk, iPad
HP reported dour results for its third quarter of the year that showed the weight both of its own indecision and pressure on its core PC business. Its revenue was down three percent to $32.1 billion, but its profit dropped a steep 91 percent, down to just $200 million. Gains in its services and software were more than offset by drops in the PC and printer businesses, each of which saw their own revenue drop two and 10 percent respectively.
The PC group was weighed down most by home buyers shying away. Its work PC revenue was up five points, but customers were steering away from home PCs and led to a nine-point drop in revenue for the divisions that made the Pavilion and Envy lines. HP wouldn't give shipment numbers, although it said the volume had grown just two percent over a year ago, with desktops up five percent and notebooks advancing just one point.
It cost about $1.5 billion to shut down the webOS hardware group, HP said, and a total of $3.3 billion in overall expenses.
The company didn't attempt to directly explain the PC slump, although it hinted that the uncertainty over the PC division's fate created by ousted CEO Leo Apotheker may have been partly to blame. HP needed to "get back to the business fundamentals," current CEO Meg Whitman said, hinting that Apotheker's attempts to turn HP into a services company like his former employer SAP had taken the company off track.
Such growth would be smaller than earlier in the year and could risk HP losing market share. Challengers like Apple and Lenovo have been growing much faster, and Acer's rapid fall in share hasn't usually been to HP's benefit. Before his forced exit, Apotheker blamed the iPad for poor results that had made it difficult to compete in PCs.
HP expected its profit to recover but, in a sign of reduced confidence, decided it would now strip out most of its outlook and give only its profit expectations in terms of earnings per share. Under this view, it would see profit bounce back from about 12 cents per share to between 61 to 64 cents, but it wouldn't say whether this would come with declining revenue. The new metric was a "better indicator" of how well HP was doing, the company claimed.