updated 06:10 pm EDT, Wed October 3, 2012
Whitman says profits will be down, stocks tumble
HP CEO Meg Whitman predicted that the computer maker's fiscal 2013 profit wouldn't meet market estimates today, and shares in the company subsequently plunged below their nine-year low. Whitman also said that the company's turnaround efforts would take quite a while, Bloomberg reports today, a prediction reflecting the company's difficulties in maintaining margins as consumers increasingly opt for mobile devices over the PCs HP manufactures. HP stock dropped 13 percent on the day, closing at $14.91, their lowest point since 2002. Shares in the company have dropped 35 percent since HP was named CEO a year ago.
Whitman told investors that HP's recent financial performance "has not been good" and that "it's going to take longer to right this ship than any of us would like." Analysts expected the company to release earnings figures of about $4.16 per share for fiscal 2013. Instead, HP is now expected to release earnings between $3.40 and $3.60 per share.
Whitman said the next year will be a "fix and rebuild year," but she also said that "innovation is actually alive and well" at the company. She noted that HP must work harder to get ideas made into products and shipped to market in a shorter time frame.
Whitman's tenure at HP began in a time of turbulence for the company. HP dropped then-CEO Leo Apotheker in favor of Whitman. Apotheker had come to helm the company in the wake of a scandal involving former CEO Mark Hurd. Apotheker had planned for the company to move away from mobile hardware and to consider spinning off its PC business in favor of a move toward enterprise services. Since Whitman's tenure began, the company has continued to work at enterprise services, but it has renewed its focus on hardware, and the Whitman recently hinted that the company would likely have to release a smartphone to really be able to offer enterprise customers an attractive services package. The company recently announced a new tablet aimed at enterprise and government clients.