HP profit falls 44 percent amid weak PC sales

Hewlett-Packard's profit dipped sharply in the first quarter as consumers slowed spending on its PCs and printers

By James Niccolai, San Francisco | Thursday, 23 February 2012
Hewlett-Packard's profit dipped sharply in the first quarter as consumers slowed spending on its PCs and printers, HP announced Wednesday.

Revenue from HP's massive Personal Systems Group, which sells PCs and workstations, declined 15 percent from last year to US$8.9 billion, HP said. Sales to consumers dropped by a quarter from last year, while sales of business PCs slid 15 percent.

HP's Imaging and Printing Group also fared poorly. Revenue was down 7 percent to $6.3 billion, HP said, with sales to consumers hit hardest.

HP is trying to reinvigorate itself after a difficult year in which it said it might spin off its PC division and then changed its mind, and in which it made an ill-fated foray into the tablet market, only to give up on it some months later.

HP met its own profit goals for the quarter, President and CEO Meg Whitman said in a statement, and is "taking the necessary steps to improve execution."

Whitman took the helm of HP last September after the board ousted former CEO Leo Apotheker, who lasted in the job less than a year. This was HP's first full quarter under the former eBay chief.

Total revenue for the quarter, ended January 31, was $30 billion, down 7 percent from last year, HP said. Net profit was $1.5 billion, down 44 percent, or earnings per share of $0.73.

Before one-time charges, HP's earnings would have been $0.92 per share, better than the $0.87 analysts had been expecting, according to a poll by Thomson Reuters, and in line with HP's earlier guidance.

HP's other big division, its services group, grew revenue just 1 percent year over year to $8.6 billion. Revenue from enterprise storage and servers fell 10 percent, while revenue from software grew 10 percent.

For the second quarter under way, HP expects earnings before one-time items of $0.88 to $0.91 per share, it said, slightly below the analyst forecast. It left its target for the full year unchanged, expecting at least $4.00 per share.