HP earnings report worrying for PC industry
By Alexis • Feb 23rd, 2011 • Category: Industry News
- Photo: włodi / Flickr
Sometimes you win them and sometimes you lose them. On that rare occasion, you win them and lose them at the same time. HP has had such a rare occasion, with the company’s earnings report beating the street’s estimates, but their reduced forecast scaring investors. And the only punishment for a company that scares its investors is a wrap on the knuckles and a plunging share price.
HP made good money, though
HP’s revenue for the fiscal quarter ending 31 January totaled $32.3 billion, just shy of street estimates that pegged the company at making $32.96 billion. Net income for this same period was $2.6 billion, up from $2.3 billion the year prior.
It’s the guidance that’s worrying, however
Even though HP earnings for the quarter were highly respectable, especially the 20 per cent plus increase in quarterly profits, it’s the guidelines for the future that has investors jittery. HP says that they think revenue will be between $31.4 and $31.6 billion dollars, and earnings per share of between $1.19 and $1.21. Analysts were looking for earnings guidance of $1.25 per share and revenue of $32.62 billion. As such investors pounded the company, with HP share price plunging a dramatic 8 per cent.
What is attributable to this drop in HP earnings? Weaknesses in Intel’s services and consumer business, which include the printing business, which reminds us of a report regarding how tablet PCs were affecting major company’s printing businesses.
Transitional times
The PC industry is in a transitional phase. Sales of smartphones are now outpacing sales of PCs for the first time ever, and this looks like it will be the case for the foreseeable future. The tablet PC market, which is being dominated by Apple, has eroded sales from netbooks, and may begin stealing sales from notebooks, too. HP earnings are showing early signs of how this shift could affect their leadership in the PC business.
HP is trying desperately to adapt to these new market conditions, using its webOS brand for both smartphones and tablet PCs, while also protecting HP printer sales. How this transition will fair will be a big determinant of Hewlett Packard’s continued dominance of the PC industry.
Tags for this article: hewlett packard, smartphones, hp


