HP raises 2013 outlook as Whitman’s plan takes hold

SAN FRANCISCO, Thu May 23, 2013 — Hewlett-Packard Co. raised its 2013 earnings outlook after quarterly results beat low expectations, as CEO Meg Whitman’s turnaround plan helped offset shrinking personal computer sales with enterprise computing services.
While fiscal second-quarter profit plummeted 32 percent, Wall Street had braced for worse. HP shares gained 14 percent after the company projected full-year earnings per share of $3.50 to $3.60, raising the lower end by 10 cents, and fiscal third-quarter profit that topped analyst estimates.
Whitman, who took the helm at the world’s largest PC maker more than a year ago, is orchestrating a turnaround, trying to recapture some of the Silicon Valley icon’s former strong growth. She has said the process could take years.
HP received a warmer welcome from investors for its results than smaller rival Dell Inc, which last week reported a 79 percent slide in profit and is now mired in a takeover battle between founder Michael Dell and activist investor Carl Icahn.
“This is another good deposit on the road to our turnaround here,” HP Chief Financial Officer Cathie Lesjak said in an interview. “We are roughly where we want to be in total on the company.”
Enterprise services and printing units are “probably a little bit ahead,” she said, adding the two businesses helped drive the company’s gross margin improvement during the quarter.

HP Chairman Lane resigns, Whitworth takes over for now

SAN FRANCISCO, Fri Apr 5, 2013 — Hewlett-Packard Co. Chairman Ray Lane, who has come under fire from shareholders for his role in the acquisition of software company Autonomy Plc, has relinquished his post in the No.1 personal computer maker’s latest board shake-up.

Two other directors left as HP, which has gone through several board upheavals in the past decade, said director and activist investor Ralph Whitworth will serve as interim chairman until Lane’s replacement is found.

HP is also seeking two to three new board members, the company said on Thursday.

The changes come weeks after Lane, a Kleiner Perkins managing partner who will remain an HP director, narrowly won reelection at HP’s annual shareholders’ meeting with less than 60 percent of voting shares compared with 96 percent a year ago.

Two other directors who kept their seats with narrow margins, G. Kennedy Thompson and John Hammergren, will leave the board, and the company will look for two to three new, independent replacements.

Lane is one of the most prominent casualties of an acquisition that has incensed investors, who have criticized the company for paying $11 billion for Autonomy and for failing to conduct proper due diligence. HP eventually took a multi-billion dollar writedown on the asset’s value.

“After reflecting on the stockholder vote last month, I’ve decided to step down as executive chairman to reduce any distraction from HP’s ongoing turnaround,” Lane said in statement. “Since I joined HP’s board a little over two years ago, I’ve been committed to board evolution to ensure our turnaround and future success.”

Analysts cut price targets on HP, see slow turnaround

PALO ALTO, Calif., Thu Oct 4, 2012 – A slew of brokerages cut their price targets on Hewlett-Packard Co. stock, saying the weak economy will continue to weigh on the company that has been plagued by operating problems and slow growth in its computers and printers businesses.

HP warned of an unexpectedly steep earnings slide in 2013 on Wednesday, with revenue set to fall in every business division except software.

Shares of the company fell about 4 percent to $14.26 on Thursday morning. They fell 13 percent to a nine-year low on Wednesday.

Analysts expect the company’s revenue and margins to falter, increasing uncertainty about its recent strategic decisions which focus on transforming the former industry powerhouse into an enterprise computing corporation that can take on IBM and Dell Inc.

“HP’s assumption of turning around the enterprise services business within one-two years looks aggressive, given the significant revenue decline and margin deterioration expected in fiscal 2013,” BMO Capital Markets analyst Keith Bachman said.

HP to lay off 27,000 over next few years, profit slides 31 percent

SAN FRANCISCO, Thu May 24, 2012 – Hewlett Packard Co. plans to lay off roughly 27,000 employees or about 8 percent of its workforce over the next couple of years to jumpstart growth and save up to $3.5 billion annually, sending its shares 11 percent higher.

The company said the layoffs would be made mainly through early retirement and would generate annual savings of $3 billion to $3.5 billion as it exits fiscal year 2014, when the layoffs are expected to the completed.

The world’s No. 1 personal computer maker, which employs more than 300,000 people globally, also said on Wednesday that it had a 31 percent decline in second-quarter profit and a 3 percent decline in revenue, compared with a year ago.

The results, however, were better than Wall Street expectations.

Layoffs “adversely impact people’s lives, but in this case, they are absolutely critical to the long-term health of the company,” Chief Executive Meg Whitman said.

“This is broad based,” she said in an interview. “By design, it will touch all of HP.”

Whitman said a third of the layoffs would be in the United States. The company will take a pretax charge of $1.7 billion in fiscal 2012 related to the layoffs.

Whitman plans to boost spending on research and development, especially in printing and PCs, with the savings from the cost cuts.

Sterne Agee analyst Shaw Wu said the quarter was surprisingly strong for HP, which had missed its own forecast most quarters in the last 18 months and prior to Whitman taking over as CEO.

Hewlett Packard adds activist investor Ralph Whitworth to board

PALO ALTO, Calif. ― Activist investor Ralph Whitworth is joining Hewlett Packard Co’s. board after taking a small stake in the Silicon Valley behemoth, a move that may cheer many on Wall Street frustrated by the company’s recent decisions.

The addition of Whitworth, who co-founded San Diego-based activist investment fund Relational Investors LLC, makes HP’s board one of Silicon Valley’s largest, with 14 directors.

HP’s board has found itself time and again on the firing line since the infamous wire-tapping incident of the 1990s, when a scandal involving eavesdropping on directors and journalists forced then-chairwoman Patricia Dunn’s resignation.More recently, it has faced a storm of investor criticism and shareholder lawsuits over decisions from the hiring of former SAP AG (SAPG.DE) CEO Leo Apotheker as chief executive, to the haphazard way it has communicated its strategy, including a consideration to hive off its personal computer division.

Apotheker was replaced by former eBay Inc CEO Meg Whitman in September.

“HP is taking a proactive approach to upgrading its board of directors in the face of heavy investor frustration,” said Brian Marshall, analyst with ISI Group.

CNBC reported that Whitworth has a nearly 1 percent stake in HP. Neither the company nor Whitworth has disclosed the amount of shares that he owns. Whitworth was unavailable for comment. HP declined to comment beyond its statement.

Hewlett-Packard weighing sale of Palm webOS unit

NEW YORK/SAN FRANCISCO ― Hewlett-Packard Co. is looking to sell Palm’s webOS mobile software platform, a deal that could fetch hundreds of millions of dollars but less than the $1.2 billion that HP paid last year, four sources close to the matter said.

Advised by Bank of America Merrill Lynch, HP is trying to figure out how to recoup its investment in Palm, viewed by many analysts and investors as an expensive foray into the smartphone market that has not paid off.

Several technology companies have expressed an interest in buying the division, which is seen as attractive for its patents, the sources said.

Amazon.com Inc., Research In Motion, IBM, Oracle Corp. and Intel Corp. are considered to be among the companies likely to be interested in the asset, industry sources said.

The future of the unit, which HP acquired when it bought Palm in 2010, was in jeopardy after the company decided to kill its webOS-based TouchPad tablet following poor sales.

An HP spokesman said “we are exploring ways to optimize the webOS software,” and declined to further comment.

HP is still mulling the software’s future, including if it should build a new webOS-based tablet, HP’s new chief executive Meg Whitman said in a recent interview.

“The question now before us is what do we do with webOS software and do we come back to market with webOS devices,” Whitman said. “It obviously will not be the same device but it will be version 2.0.”

In October, HP ditched a plan to spin off its personal computers unit, a month after the ouster of CEO Leo Apotheker whose idea would have cost billions of dollars in expenses and lost business.

The boutique investment bank Parella Weinberg, which had been hired by Apotheker at the time to explore alternatives, has since lost the mandate as HP’s adviser, the sources said.

Parella Weinberg was not immediately available for comment. Bank of America declined to comment.

JP Morgan restarts Hewlett-Packard; cautious on big challenges

PALO ALTO, Calif. ― Hewlett-Packard Co. could face a troubled turnaround, with tough challenges that could result in underwhelming revenue and earnings growth, JP Morgan said, resuming coverage of the Silicon Valley company with an “underweight” rating.

HP is likely to underperform its peers as it undergoes a leadership transition, and the broader economy affects an overhaul of its businesses, JP Morgan analysts, led by Mark Moskowitz, wrote in a client note.

In August, HP stunned Wall Street by dropping its new TouchPad tablet device and saying it may spin off the world’s largest personal computer business.”HP’s $11.7 billion buy of software company Autonomy is expensive in the context of slowing organic growth and was not in the best interest of shareholders,” Moskowitz said.

“We think HP has set an unfavorable precedent that favors the sellers, not shareholders … HP will have to make a series of acquisitions over the next 5-10 years to become a full-fledged, one-stop IT shop,” he said.

The analyst expects HP, which has missed profit expectations three quarters in a row, to further disappoint Wall Street in the near to mid-term.

“The unclear messaging related to the PC business has contributed to competitive displacements, based on our conversations with industry contacts. It is our view that Dell and Lenovo are the early beneficiaries,” Moskowitz said, adding a slowdown would weigh on HP’s printer and services businesses.

Printer sales are likely to be dented as consumers move to smartphones and tablets, and slowing demand squeezes corporate IT budgets.

HP last month named Meg Whitman as president and CEO, replacing Leo Apotheker in a bid to restore investor confidence in the tech blue-chip.

Moskowitz praised Whitman’s leadership and communication skills, but expressed concerns about the former eBay Inc. CEO’s appointment.

“Our research indicates Whitman was not always willing to make the big changes at eBay near the end, and changes that investors had sought did not occur until after Whitman’s tenure. We are cautiously optimistic on the new appointment.”

Shares of the company closed at $23.02 on Tuesday on the New York Stock Exchange.

Oracle brings new claims against HP in Itanium case

SAN FRANCISCO ― Oracle accused Hewlett-Packard of fraud for concealing facts during negotiations between the two companies, according to a court filing.

The cross complaint filed by Oracle against HP on Tuesday is the latest salvo in ongoing litigation over the Itanium platform.

Oracle decided in March to discontinue its support for Itanium, a heavy-duty computing microprocessor, saying Intel Corp made it clear that the chip was nearing the end of its life and the company’s focus was on its x86 microprocessor.

HP has dubbed Oracle’s decision “anti-customer” behavior. The company sued Oracle in a California state court in June.

The litigation has been part of a deteriorating relationship between the two companies. Oracle hired former HP chief executive Mark Hurd last year after Hurd left HP amid questions about his relationship with a female contractor.

HP filed a trade secrets lawsuit against Hurd related to the Oracle hire, which was soon settled.

In the filing on Tuesday, Oracle claims HP fraudulently induced Oracle to enter into the Hurd settlement.

HP concealed the fact that it was about to hire Leo Apotheker as its chief executive, and Ray Lane as its chairman, Oracle’s filing says.

Apotheker and Oracle CEO Larry Ellison have long been rivals from the time Apotheker headed European software maker SAP AG. HP Chairman Ray Lane and Ellison had a troubled relationship from the time Lane was fired from Oracle in 2000, according to the filing.

“Given the well-documented animosity between Oracle and Messrs. Apotheker and Lane, HP knew that Oracle would not have signed the Hurd Agreement had it known of HP’s imminent plans,” the filing says.

An HP representative could not immediately comment Tuesday.

Other claims asserted by Oracle against HP include defamation and intentional interference with contractual relations. Oracle seeks rescission of the Hurd agreement, general and punitive damages and other remedies.