(Reuters) - A host of brokerages cut their price targets on Hewlett-Packard Co’s stock, after the No. 1 PC maker posted an $8.9 billion loss and narrowed its full-year earnings outlook, echoing concerns raised by rival Dell Inc about faltering demand for PCs.
HP shares, which closed at $19.20 on the New York Stock Exchange on Wednesday, were set to open about 5 percent lower on Thursday.
HP took a $10.8 billion charge in the quarter, mostly related to the writedown of its EDS acquisition and said the outlook change is on a faltering PC market and tough economic conditions in Europe and China where growth is slowing.
HP’s PC concerns mirror those of rival Dell Inc, which slashed its full-year earnings outlook on Tuesday saying customers cut back on computer purchases ahead of the launch of Microsoft’s Windows 8 software.
While RBC analysts said channel inventory drawdown ahead of the Windows 8 launch negatively impacted sales of PCs at HP, Baird Equity Research said consumers are spending on alternative devices.
Notebooks are losing more and more market share to Apple Inc’s iPads, Barclays analyst Ben Reitzes wrote in a note.
“We think that both Dell and HP face an uphill task in the PC market, which is affected both by weak macro and changing consumer preference with no credible tablet product,” BMO Capital Markets analyst Keith Bachman wrote in a note.
HP and Dell are also struggling to defend their PC market share from Asian rivals such as Lenovo Group Ltd and Acer Inc.
Sales from printing and imaging at HP fell 3 percent in the third quarter.
Jefferies analyst Peter Misek said inventory correction in the printer segment will take several quarters to resolve and it increasingly seems smartphones and tablets are reducing overall demand.
HP consolidated its PC and printing segment in March, which now comprise almost 50 percent of the company, Baird said.
Reporting by Chandni Doulatramani and Sruthi Ramakrishnan in Bangalore; Editing by Joyjeet Das