Feeds

HP tightens financial belt for 'tough' Q3

No stomach for 'profitless revenue'

Boost IT visibility and business value

Move over beleaguered Cisco Systems, here comes Hewlett-Packard. Newly minted Hewlett-Packard CEO Leo Apotheker is looking for HPers to tighten the belt and use good judgment aimed at generating profits as they pursue sales in the company's third fiscal quarter of 2011, which began on May 1.

According to a report in the Wall Street Journal, Apotheker sent the email on May 4, which was the same day that the company announced it would be holding its quarterly conference call with Wall Street analysts to go over HP's second quarter of fiscal 2011 ended on April 30.

An HP spokeswoman refused to confirm the existence of the memo to El Reg and refused to comment on the matter. But the WSJ said that the Apotheker told HP employees to expect "another tough quarter" coming up and that they had to "watch every penny". Apotheker was particularly forceful about how the company has to work to boost revenues and profits alike and reminded the company's staff that the company could not engage in "profitless revenue" and had no room for "discretionary spending."

Bloomberg also got its hands on the Apotheker memo, and said that the HP CEO told his top brass to "minimize all hiring" and that its current workforce was "unaffordable" given all the issues HP is facing. The company had 324,600 employees at the end of its fiscal 2010 last October, and is reportedly re-examining its headcount and cost structure.

That sure doesn't sound like a recovery in IT spending like IBM, Intel, and others are crowing and crooning about as they boost their dividends and share buybacks. HP has a lot more exposure in the consumer market than Big Blue, of course, and Intel has benefitted mightily from a resurgence in corporate server spending and the Windows 7 refresh cycle among businesses, which pretty much ignored Windows Vista and are very eager to get off Windows XP. (Intel gets to keep the lion's share of profits in the PC racket.)

The news that HP is tightening its belt for Q3 follows a miss in Q1. In Apotheker's first full quarter on the job ended January 31, HP posted revenues of $32.2bn, up 3.2 per cent, with net income of $2.61bn, up 15.8 per cent compared to the year ago quarter. But the company also said that because of issues in short-term services business and in its PC business in China, it would chop $2bn out of the company's revenue guidance for the full 2011 year.

That would put sales at $130bn to $131.5bn. Cathie Lesjak, HP's CFO, said that the company was raising guidance for non-GAAP earnings per share for the year, from $5.20 to $5.28, up somewhere between 14 and 15 per cent compared to fiscal 2010. And that is with pay raises to HP employees factored in for the year.

Lesjak said back in February that HP's second fiscal quarter sales to be between $31.4bn and $31.6bn. In after-hours trading on Monday after the news broke, HP's shares were down 4.9 per cent, to $37.87. ®

Maximizing your infrastructure through virtualization

More from The Register

next story
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.