* Donatelli to look at possible acquisitions
* Veghte to take over Enterprise Group
* CEO says sales growth next fiscal year "unlikely"
* Shares fall 5 pct after hours
By Edwin Chan
SAN FRANCISCO, Aug 21 Hewlett-Packard Co
shuffled its top ranks on Wednesday, reassigning a star
executive to a new role identifying potential acquisitions, as
the world's largest personal computer maker reported a
larger-than-expected slide in revenue and forecast zero sales
growth next year.
Its shares dropped 5 percent in after-hours trading.
The Silicon Valley stalwart, which has been undergoing a
radical reshaping under Chief Executive Meg Whitman for the past
two years, is looking for ways to escape the decline in PC sales
as tablets and smartphones revolutionize computing.
Whitman, who said in May that fiscal 2014 revenue growth was
still possible, told analysts on a Wednesday conference call
that growth next year was now "unlikely" given the poor
performance of the Enterprise Group and PC divisions.
"My read was that fiscal 2014 growth was a stretch goal
rather than a baseline assumption," said Shebly Seyrafi, an
analyst at FBN Securities. "That has become more challenging."
To meet that challenge, Whitman made a key personnel move on
Wednesday, replacing Dave Donatelli with Bill Veghte at the helm
of HP's second-largest business division, the Enterprise Group.
Donatelli, a rising star that Wall Street analysts once
considered a candidate for a tech CEO position, relinquishes his
post as chief of the unit, which sells server, storage and
software services to large organizations. He will now focus on
identifying early-stage technologies for investment, the company
The executive engineered some of the company's most
significant acquisitions in past years, including of 3Com and
3PAR, which helped catapult HP deeper into the networking and
storage markets, respectively.
Whitman told analysts on the conference call the computing
giant was "back in the market" for strategic acquisitions, which
she saw as essential to a continued transformation.
Veghte takes over immediately as head of the division, and
will not be replaced as HP's chief operating officer. Veghte
joined HP in 2010 after a 20-year career at Microsoft Corp
, which culminated in his heading the business side of
the Windows unit. He also worked on developing and marketing
Microsoft's server software.
CEO Whitman, who took the reins at HP in September 2011, is
trying to revive the company after years of board turmoil and a
backdrop of rapidly declining global PC sales, but has not yet
halted revenue declines.
Donatelli is the latest executive with a strategic role to
have been replaced. In June, HP moved PC division chief Todd
Bradley into a new job aimed at improving its China business and
distribution relationships around the world, a move many
analysts deemed a demotion.
The Enterprise Group is HP's largest business unit after
personal computers, and is a critical component of Whitman's
efforts to boost margins and profitability, while trying to
minimize revenue declines.
The division, which recorded a 9 percent decline in sales in
the latest quarter, accounts for about a quarter of the
company's overall sales.
In all, the company recorded revenue of $27.2 billion in the
fiscal third quarter, down from $29.7 billion a year earlier, as
PC sales continued to slide amid a shift toward mobile
computing, and its enterprise business grappled with tepid
worldwide information technology spending.
It missed the $27.3 billion in sales that Wall Street had
expected, on average.
Overall net income in the quarter came to $1.39 billion or
71 cents a share, compared with an $8.9 billion loss a year
earlier when the company swallowed a big writedown of the IT
outsourcing business it inherited when it bought Electronic Data
Systems for close to $14 billion in 2008.
Excluding one-time items, the company earned 86 cents a
share, matching the 86 cents average forecast by analysts on
Thomson Reuters I/B/E/S.
Shares in the company slid more than 5 percent to $24.07 in
after hours trade, from a close of $25.38 on the New York Stock