SAN FRANCISCO — Meg Whitman, Hewlett-Packard‘s chief executive, says she thinks her company did almost everything well in its most recent fiscal quarter. Except make money.
HP shares tumbled about 7 percent in after-hours trading on Tuesday, after the release of first-quarter earnings that showed drops in revenue and net income, and flat to lower sales in almost all product areas. The company also sharply lowered its outlook for annual earnings.
Ms. Whitman characterized the quarter as having “excellent execution,” a Silicon Valley term for doing what one sets out to do. She added, “a few spots need work.”
The problem for HP, she said, was a sharp rise in the value of the dollar, which makes it harder for the technology giant to profitably sell much of its computer hardware and software in overseas markets.
“Currency headwinds,” she explained. “In the past three months we lost $1.5 billion in operating profit to the stronger dollar.” Though Ms. Whitman said HP is taking steps to insure against further strengthening of the dollar, she lowered the company’s forecast earnings for the year by about 7 percent.
HP is one of the world’s largest technology companies, making personal computers, computer servers, printers, data storage and networking gear. Many of these businesses have been battered over the last several years, as the company contends with new businesses, like smartphones, or the rental of computing time and software via Internet-based cloud computing systems.
In response, last October HP announced it would split into two companies at the end of this fiscal year. One company will primarily focus on business computing products, like servers, while the other will have products for business and consumers, like PCs and printers.
Ms. Whitman is credited with managing HP efficiently through a difficult period, a skill reflected in a stock price rise over the last year that was double that of the overall market.
“The market is giving her credit for not going under,” said Bill Kreher, an analyst with Edward Jones. “You still need strong products and innovation over the long run. That is something HP has failed to demonstrate.”
For the quarter ending Jan. 30, HP reported revenue of $26.8 billion, a fall of 5 percent from a year ago. Net earnings were $1.4 billion, down 4 percent. Using nonstandard accounting popular in the tech business, per-share earnings were 92 cents.
The revenue numbers were worse than expected in a survey of Wall Street analysts by Thomson Reuters. They thought HP’s revenue would be $27.3 billion. Per-share were 91 cents.
Ms. Whitman said that HP was not cutting back on research and development, despite the lower earnings, and said valuable new products were on the way, particularly in business computing.
Another bright area, she said, was HP’s security software business, thanks to the hacking last year on Sony Pictures. While there had been earlier violations of corporate computers, she said, Sony took the business up to a new level. “We’re sold out — 5,000 security professionals.”
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