HP hopes for slower sales declines in 2014
October 10, 2013
In a typical response to the above news, investors bought in on Hewlett-Packard's vision of the future yesterday. Market analysts who advise the pension plans -- and the rest of the 75 percent of institutional-owners of HP shares -- found this lump of non-dire news under HP's carpet. CEO Meg Whitman said they predicted there would be 1 percent more profit than the analysts' predictions. One estimate bested another by a trace amount, and so hope rose up among shareholders.
None of this has happened yet; even HP's fiscal 2013 still has three weeks left to play out, let alone the realities of 2014. "Pockets" of growth in HP's sales have been promised, although the company cannot say where those pockets will appear. They might be in tablets, where HP could manage revenue growth with sales that become measurable. Or the growth might occur in enterprise servers and software, a prospect with much longer odds.
"Stabilizing revenue declines" are the brightest outlook HP can promise for the year to come. That HP had to promise continuing declines shows how tough its IT sales market has become. People who were buying laptops for business are now investing in tablets or working via smartphones, both of which are more mobile. HP's offerings in both segments are years behind market leaders, echoes of cheaper solutions, or invisible (in the case of the phones).
Mobile computing is one of the many sectors of computing products where HP's got big issues to resolve. One analyst said after yesterday's meet that it wouldn't be a great investment to buy HP stock, given the "growth challenges the company is facing in nearly every product category." Investment in buying HP's products is another matter, but it's the one which determines that growth challenge.
HP's fiscal numbers for its latest quarter won't surface for more than a month. But Whitman's cheerleading came during a two-day meeting with those analysts. HP earned a $2 share bump on a forecast that put its 2014 profits 3 cents a share higher than a $3.62 forecast. Whitman said HP will focus on new products and services next year -- a category that may not include HP's Unix, its Integrity-based servers, or other solutions from the combined enterprise unit that has been producing steady HP 3000 platform replacements.
Whitman said HP is recommitted to smarter innovation, with R&D spending expected to be in excess of $3 billion for the fiscal year that ends in three weeks.
“While there is a lot more work to be done, I am confident about the progress we are making,” said Whitman. “We’re producing tangible results, strengthening our balance sheet and delivering innovative products across all our key segments. We are implementing the changes needed to support our multi-year turnaround journey, reaffirm HP’s leadership position, and create enduring value for customers as well as for our shareholders”
HP says the core of its strategy for 2014 is focused on “providing unique technology solutions for the ‘New Style of IT.’ "