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.

Automakers see slower U.S. sales growth in 2012 because of weak economy

DETROIT ― Automakers expect lower sales growth in the United States in 2012 because the economy remains weak, even though U.S. auto sales in December were strong.

General Motors Co’s. U.S. sales in December rose about 5 percent, while sales at Ford Motor Co. and Chrysler jumped 10 percent and 37 percent, respectively.

U.S. new-vehicle sales are an early indicator each month of consumer spending, and the United States is the world’s second-largest auto market behind China.

Automakers are headed for full-year 2011 sales of about 12.8 million vehicles, 10 percent higher than 2010. U.S. auto sales have been a relative bright spot, with many cash-strapped consumers forced to purchase cars and trucks to replace vehicles that have been on the road for a decade or longer.

GM, Ford and Volkswagen AG, which reported a 36 percent gain in December, all said growth would increase at a lower rate in 2012.

GM and VW expect 2012 U.S. sales in the range of 13.5 million to 14 million vehicles, which implies growth of between 5 and 9 percent. Ford sees a range of 13.2 million to 14.2 million, excluding medium and heavy-duty trucks.

“The momentum coming out of the fourth quarter gives us confidence that the low end of that forecast is less likely,” Ford economist Ellen Hughes-Cromwick said on a conference call.

Industry research firm expects 2012 U.S. auto sales to reach 14 million vehicles.

That is still much lower than the nearly 17 million in U.S. annual auto sales averaged in a 10-year period through 2007. In 2008, recession began to take hold and a year later GM and Chrysler filed for bankruptcy.

“Over the course of the fourth quarter of 2011, clear signs emerged that U.S. consumers are more confident and that other underpinnings of our economy are either stable or slowly improving,” GM U.S. sales chief Don Johnson said in a statement.

“It’s now clear that auto sales should continue to grow in 2012, barring a shock to the system,” he added.