Ms. Whitman, the company’s sixth CEO in seven years, told investors and analysts on a conference call, “During the quarter we took important steps to focus on strategic priorities, manage costs, drive needed organizational change, and improve the balance sheet. We continue to deliver on what we say we will do.”
Ms. Whitman pointed to its money losing services division — of which it took a writedown of $8 billion — , a slump in P.C and server sales, as well as marginal economic growth in the developed world as the reason for HP’s spectacularly poor quarter.
“Enterprise weakness,” was the ailment pointed to in describing why P.C sales are slumping.
In May the company said it would slash 27,000 jobs — about 8 percent of its total workforce.
The recovery that Ms. Whitman talks about is reorienting HP to focus on high margin technology consulting, computer software, data storage, and servers for enterprise clients.
Part of this recovery will be the release of a Windows 8 tablet geared towards enterprise customers.
This will be HP’s second tablet, after its ill-fated consumer oriented TouchPad of last year.
“Make no mistake about it, the consumer tablet market today is an Apple market,” Whitman said. “Our decision was not to just go straight at Apple with a me-too product.”
In a note to clients, Needham Research’s Richard Kugele expressed his concerns with HP’s current condition.
“We are deeply troubled by the events at H-P and within the broader PC landscape. In our view, these issues include: 1) macroeconomic headwinds weighing on IT spending (and expected to continue “well into FY13”); 2) a fundamental shift in printing habits, impacting IPG; 3) a once-strong services business that is seeking to recreate former pricing power; 4) a PC business struggling to find a place in the new tablet/ultrathin world while fighting off bottom-feeders; and 5) making lemonade out of the lemon Autonomy acquisition.”
HP’s shares fell $1.21 to $17.99 on Wednesday after the announcement, and slumped further to $17.64 during the Thursday trading day.