HP warns of tough year, cuts financial forecast

By Geoff Duncan May 17, 2011

HP CEO Leo Apotheker — Image used with permission by copyright holder

Technology giant Hewlett-Packard jumped the gun a little bit and pushed its financial results for the second quarter of its fiscal year out the door a little early. Overall, the numbers find HP’s revenue was up three percent compared to the same quarter a year ago, with new revenue a whopping $31.63 billion and earnings of $2.3 billion. However, the company also cut its earning forecast for the year, sending its stock into a downturn, as the company works to overcome a serious of obstacles—including supply chain issues stemming from the massive 9.0 magnitude earthquake that struck Japan in March.

“HP executed well and delivered a solid quarter,” said HP CEO and president Leo Apotheker, in a statement. “Our enterprise strategy, with services at its core, is focused on higher value-added solutions. Today we are accelerating our efforts to align our services business model to our long-term strategy to deliver unprecedented value to our customers and a better return for our shareholders.”

Overall, HP’s earnings translated to $1.05 per share—excluding special items, that would have been $1.24 per share, and both figures beat what Wall Street analysts were expecting. However, looking forward HP forecasts its next quarter earnings will be $1.08 per share, and the company revised its forecast for the full year to earnings of $5 per share, moving expectations down a notch from the $5.20 to $5.28 they were forecasting earlier this year. In addition to ramifications from the Japan quake, HP cited overall softness in the PC market—which is being partly eroded by tablets—as well as reduced operating profit from its services division, which provides tech services to government, education, enterprise, and other sectors.

A leaked memo from CEO Apotheker warned that the company would be facing a tough quarter and that managers within the company needed to “watch every penny and minimize all hiring.”

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