On Wednesday, Oct. 3, Hewlett-Packard's (HP's) shares nose-dived to a nine-year low following a "steep earnings slide in 2013," warning from CEO Meg Whitman. Shares of HP fell 13 percent, closing at $14.91 on Wednesday, making it the company's largest single-day decline since August 2011.
Additionally, on Oct. 4, shares of few of HP's contract makers in Asia also tumbled when trading opened on Thursday morning.
Whitman is the company's third CEO in as many years and took over the helm last year. Whitman's turnaround plans for HP revolve around converting the company into a powerful computing corporation, which can take on rivals like Dell and IBM with ease. However, Whitman told investors that HP's recovery plans would start taking shape and become noticeable by FY 2014, when the investments would bear fruition.
According to Whitman, the changing leadership over the span of last few years has been responsible for the current state of affairs, and a major setback to the company's turnaround.
"The single biggest challenge facing Hewlett-Packard has been changes in CEOs and executive leadership, which has caused multiple inconsistent strategic choices, and frankly some significant executional miscues," Whitman told the investor conference in San Francisco. "This is important because as a result it is going to take longer to right this ship than any of us would like," she added.
Since 2010, when HP's capital was nearly $104.5 billion, the company has lost nearly two-thirds of its market value. Presently, HP is estimated to be valued at $30 billion. The decline in market value is largely attributed to the slide in demand for PCs, thanks to the advent of tablets and other devices that encourage mobility. Since September 2011, when Whitman first took over as CEO, the company's stock value has fallen by 35 percent.
According to analysts, HP is not only battling dwindling figures and profit margins in an extremely competitive environment, but the company is also unable to improve its credibility and investor confidence on Wall Street. The company's reduction of IT spend and internal overhauls, that have involved laying off of several thousands, is not helping HP's market presence.
"I was surprised that nothing new was really said in terms of strategy, and the problem here is there is lack of investor confidence in the current strategy," said Shaw Wu, an analyst with Sterne Agee.
HP also gave a not so positive forecast for its enterprise services, which is pivotal to Whitman's turnaround plans. Revenue from the services is estimated to "dive 11 to 13 percent in fiscal 2013 and be barely profitable, with operating margins of zero to 3 percent." By contrast, IBM raised its earnings outlook for the entire year, despite the fact that the company had a 2 percent decline in services and flat software revenue in Q2.
However, with Mike Nefkens, HP's acting global enterprise leader, averring that fiscal 2013 "will be a fix and build year," the company has a silver lining and the future does not look as bleak.
"We expect long-term growth to be back in the 3-5 percent range and long-term profit to be in the 7-9 percent range," noted Nefkens.
© Copyright 2020 Mobile & Apps, All rights reserved. Do not reproduce without permission.most read
more stories from What's Hot
Rockstar Games has acknowledged the most common GTA Online launch issues and detailed the bug fix status for each problem it's currently working on.
ernest hamiltonTarget has announced its new prepaid mobile service, Brightspot, which will debut on Sunday, Oct. 6.
ernest hamiltonHulu has added support for Google's Chromecast streaming dongle, allowing Hulu Plus users to 'cast' video directly to Chromecast.
ernest hamiltonThe much-awaited Grand Theft Auto (GTA) Online mode has finally gone live, unfolding a whole interconnected universe.
ernest hamiltonBlackBerry has posted its Q2 fiscal results and blames a $935 million hit on 'Z10 Inventory Charge'
ernest hamiltonThe KitKat contest has now reached India, bringing promotional packages with the chance to win a new Nexus 7 (2013).
ernest hamiltonGoogle Talk has been sending messages to the wrong recipients, raising some serious privacy concerns.
ernest hamiltonGrand Theft Auto V publisher Take-Two has announced that the new GTA 5 made a whopping $800 million on launch day, breaking the record previously set by Call of Duty: Black Ops 2.
ernest hamilton