Hewlett-Packard Co. CEO Meg Whitman laid the bad news out on the table for Wall Street analysts.
Paul Sakuma, Associated Press
Hewlett-Packard's CEO doesn't mince words
- Article by: QUENTIN HARDY
- New York Times
- October 3, 2012 - 10:07 PM
SAN FRANCISCO - Meg Whitman, Hewlett-Packard Co.'s chief executive, beat up her company Wednesday.
Whitman told a meeting of Wall Street analysts that they should expect sharply lower revenue and profits. She also told them not to expect the company to fully right itself before 2016.
"We have much more work to do," she said.
While the news was not completely unexpected, the vehemence of Whitman's message drove shareholders to the exits. HP's stock dropped about 8 percent while she was speaking and ended the day at $14.91 a share, down nearly 13 percent.
The drubbing was probably what Whitman, the former chief of eBay, had in mind. Executives involved in her presentation, who requested anonymity because they were not authorized to speak publicly, said she wanted to get as much bad news as possible out at once, so the company could focus on rebuilding rather than having to explain one disappointing quarter after another.
Analysts, while somewhat taken aback by the depth of HP's problems, thought Whitman had made the right move in putting them out in the open.
"In an era where CEOs watch every word they say, it's refreshing to see complete candor. HP is a mess," said Patrick Moorhead, president of Moor Insights and Strategy, who attended the meeting. "It will take five to 10 years to fully take care of this, just the way it took IBM to remake itself. Wall Street doesn't like anything longer than a one- to three-year horizon. It's too much risk for them."
Hewlett-Packard forecast revenue next year of 11 percent to 13 percent below fiscal 2012 levels. Analysts had assumed it would decrease only about 1 percent.
Operating profit margins, which have been about 7 percent, could evaporate completely or, at best, shrink to about 3 percent, the company said. Earnings per share were expected to fall about 16 percent from what analysts had projected.
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