HP Issues Upbeat Profit Forecast
Hewlett-Packard Co. on Tuesday forecast higher profit for the year ahead, but warned that revenue could fall short of Wall Street’s expectations as new Chief Executive Mark Hurd pushes ahead with his wide-ranging reorganization of the world’s second-largest computer maker.
Chief Financial Officer Robert Wayman told analysts here that HP probably would earn about $2.12 a share for the fiscal year ending next October, ahead of the $2.09 consensus of Wall Street analysts surveyed by Thomson Financial. But, Wayman said, revenue was expected to come in between $89.5 billion and $91 billion, short of the expected $95.1 billion.
Shares of HP fell 90 cents Tuesday to $29.07.
“In our view, management is playing it conservative,” Cindy Shaw, an analyst with Moors and Cabot, wrote in a research note to investors.
In his first presentation to HP’s annual meeting with financial analysts, Hurd pledged to continue cutting costs, to align HP’s strategy along the lines of accountability and to make employees more responsible for their actions, and to eliminate complexity from their duties.
“We will do everything possible to execute what we say. We will expend every ounce of effort to make sure we live up to that commitment,” Hurd said. “The fourth quarter was not an ultimate victory in any shape or form.”
HP reported last month that Hurd’s restructuring plan helped boost fourth-quarter revenue and operating income. Hurd took over as head of HP in April after the ouster of Carly Fiorina, who engineered the $19-billion takeover of Compaq Computer Co.
In July he announced a recovery plan that included eliminating more than 15,000 jobs. Previously he separated HP’s PC and printing divisions, which had been consolidated by Fiorina.
“What today’s presentation reinforces is Mark Hurd’s approach to managing the business, which is to break it down to fairly simple elements,” said Tony Ursillo, an analyst with Loomis Sayles & Co. in Boston. “It sounded to me like there were no delusions of grandeur about what HP is. It’s a very big company in very competitive markets.”
