HP's growth hopes crash as PC sales continue to flatline

Chief exec Meg Whitman has admitted growth in 2014 is unlikely.

by Gabriella Griffith
Last Updated: 05 Dec 2013
Hewlett-Packard’s turnaround hopes have taken a blow thanks to disappointing third quarter results. The PC maker, once the world’s largest, has revealed an 8% decline in revenues compared with last year, and chief executive Meg Whitman has been forced to admit the firm’s hopes for revenue growth in 2014 are ‘unlikely’. How the mighty fall.
 
In a video call with Wall Street, Whitman blamed tough market conditions facing the PC sector, as well as poor execution on HP’s part.

Performance of HP’s Enterprise Group, which makes and sells servers and networking gear, was particularly discouraging. The quarterly result announcement was joined by the news Dave Donatelli, head of the enterprise division, has been replaced.

‘What has changed about 2014's outlook is a couple of things - Enterprise Group's performance especially during the quarter,’ Ms Whitman told analysts.
 
‘Weak execution has amplified the market challenges we know exist. It's unlikely... we'll see the growth in 2014 that I had hoped,’ she added.

It wasn’t all terrible news; the company reported a net profit of $1.4bn for Q3, a vast improvement on last year’s $8.9bn loss in the same period.
 
That faint sparkle of hope did little to calm investors, though; 6% was wiped from the computer giant’s share price during after-market trading, with the price falling by a further 1.7% this morning. The mood in HP’s Palo Alto headquarters must be pretty subdued: confidence in Whitman's rescue efforts had boosted shares by 80% this year, but this latest news has extinguished a lot of optimism.
 
Whitman was parachuted into HP in 2011 to try and resurrect the fortunes of the Silicon Valley behemoth. As well as the spiralling PC market (global PC shipments have fallen for an unprecedented five quarters in a row), she has had to deal with the $11bn write-off of assets associated with the disastrous Autonomy acquisition.
 
But not one to let the ill-informed purchases of her predecessors get in her way, Whitman signalled a return to acquisitions for HP – no doubt in a bid to root out new pockets of growth.
 
‘We will be back in the market as we think about acquisitions that can further our objectives’ she said.
 
Whitman was also quick to remind investors that HP is involved in a five-year turnaround plan and recovery takes time. Rome wasn’t (re)built in a day.

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