SAN FRANCISCO (Reuters) - Technology bellwether Hewlett-Packard Co reported on Wednesday worse-than-expected quarterly revenue and issued an earnings forecast for the current quarter that was below Wall Street’s expectations.
BILL KREHER, ANALYST, EDWARD JONES
“A laser focus on cost-control has benefited HP despite a dramatic falloff in revenues and I don’t think the outlook is as bad as it could have been given currency headwinds and overall weak demand environment.
“Weak market conditions will persist through 2009 but we believe HP will emerge stronger due to its market positioning and cost-cutting prowess.”
BRENT BRACELIN, ANALYST, PACIFIC CREST SECURITIES
“The big disappointment, not surprisingly, is the shortfall in revenue. Their hardware businesses, both servers and storage, are under intense scrutiny. Budgets are being cut and that showed up in the shortfall today.
“PC revenue declined 19 percent, server storage declined 18 percent, year over year. Their printer hardware business declined more than 30 percent, year over year. The pace of the erosion in hardware was more severe than we expected.
“They did a good job of managing expenses in the quarter, but as you think about the fundamentals here going forward, they lowered their guidance from a revenue and profitability standpoint, and certainly we don’t have a ton of confidence, given the pace of erosion in their business. There could be further erosion from here.”
ROGER KAY, ANALYST, ENDPOINT TECHNOLOGIES
“It’s clear that the hardware groups were hit pretty badly. The imaging and printing group managed to eke out a better profit margin to keep profits constant, which is good.
“And services benefited from the acquisition of EDS. On the outlook side, it doesn’t look particularly promising. The company is basically forecasting a decline.”
SHEBLY SEYRAFI, ANALYST, CALYON SECURITIES
“My quick read is that the revenue was clearly very disappointing. The Street consensus was at $32 billion, they came in at $28.8 billion. Looking through the results, looks like they were light.
“Revenue was down across most of their major buckets like PSG (Personal Systems Group), IPG (Imaging and Printing Group).
“The fact is that they are lowering the annual outlook for the year. It was $3.88 to $4.03 per share before..., the low end of the range of the prior range is now the high end of the new range.
“They are vulnerable to weakening PC sales. Shares are down on a combination of the actual results, the revenue mess and the lowering of the annual guidance. There are lots of reasons to be concerned about Hewlett-Packard.”
Reporting by Anupreeta Das and David Lawsky
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