(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 cut its earnings outlook for the year, echoing concerns raised by rival Dell Inc about faltering demand for PCs.
HP shares, fell 7.9 percent to a three-week low of $17.68 on the New York Stock Exchange on Thursday before recovering to $17.98 in morning trade.
HP took a $10.8 billion charge in the quarter, mostly due to a writedown of its EDS acquisition, and said the weaker outlook was because of a faltering PC market and tough economic conditions in Europe and China.
HP’s poor prospects 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.
RBC analysts said inventory drawdown ahead of the Windows 8 launch hit sales of PCs at HP but Baird Equity Research also pointed to a switch by consumers to alternative devices.
Notebooks are losing market share to Apple Inc’s iPads and other tablets.
“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.
FBN Securities analyst Shebly Seyrafi said there are still many challenges for HP, such as increased competition, a backlog of printers in its inventory and a large exposure to the weak European market.
Printing and imaging sales 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 Rodney Joyce