Hewlett-Packard's adjusted earnings per share were 92 cents on revenue of $30 billion in the first quarter, while Wall Street was expecting H-P to earn 87 cents on sales of $30.67 billion.
Earnings fell 32% from the same period a year ago, and revenue slipped 7%.
Hewlett-Packard Co. Stock Price History
H-P is the world's largest PC maker, but its glory days are long gone. Over the past year, H-P stock has fallen about 40%.
Its financials for the November – January fiscal quarter illustrate the steep climb H-P faces to regain its profitable leading spot.
"All [its] segments are going to have headwinds," Abhey Lamba, an analyst at Mizuho Securities USA Inc., told BusinessWeek. "It's not going to be a one-year turnaround."
Hewlett-Packard Co. (NYSE: HPQ): What's in Store for 2012
H-P in September brought in CEO Meg Whitman from eBay Inc. (Nasdaq: EBAY). Whitman's tasked with cleaning up the messes left by her predecessors, who drove the once prolific company into an expensive identity crisis.
The company previously focused on engineering but then become more involved with PCs with its $25 billion purchase of Compaq in 2002. H-P then spent $13.9 billion on Electronic Data Systems in 2008, and last year invested $10 billion in software with its purchase of Autonomy Corp.
"Every time a new strategy comes out, the whole organization goes into shutdown mode," Phil McKinney, former chief technology officer of the PC division, told Barron's.
The quarter was Whitman's first full quarter as CEO, and according to McKinney she's already ahead of the former chiefs.
"She has spent a fair amount of time talking to people, she's approachable," said McKinney. "The previous chiefs didn't even know where the HP cafeteria was."
But the storied computer maker has two main obstacles to overcome this year. At the top of the list is the slowdown in computer sales.
According to data from research firm Gartner Inc. (Nasdaq: IT), the PC market actually shrank 1.4% in the December quarter from a year earlier. Add to that the sudden burst in tablet sales, and you can quickly see a combination of weak revenue and lower profit margins ahead for H-P.
H-P also has to fix its self-destructive decision to exit the PC market. The idea to leave the PC market came from previous CEO Leo Apotheker, who led for 11 months.
Tired of selling low-margin PCs, and with its tablet and smartphone offerings failing to catch on, H-P in August unveiled a massive change in its strategy – abandoning its consumer efforts to focus on software and services for businesses.
Then in October – after ousting Apotheker – the company reversed course and said it would not spin off its PC division.
Now H-P's large enterprise clients – companies with several hundred to several thousand users – need to know H-P is in it for the long haul. Otherwise, they'll just buy cheaper PCs and hire a service company instead of relying on H-P's support.
Hewlett-Packard Co. (NYSE: HPQ) fell about 1.4% in after-hours trading.
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