"I have said from the beginning that this is a four to five year journey," Whitman stated during the firm's securities analyst meeting in Santa Clara, Calif., warning that HP's still in the early stages of its corporate revamp. "2013 is a fix and rebuild year - we will be working through the disruptions from the necessary changes we made in 2012."
The former eBay (EBAY) took the HP reins just over a year ago, inheriting a company reeling from a succession of CEO changes and poor execution. Since then, Whitman has implemented a major restructuring plan, encompassing job cuts, leadership changes, and an effort to streamline the company's vast product lines.
HP says that it's on track to complete its restructuring by the end of fiscal 2014. By 2016, Whitman expects to see the company's revenue growing in line with GDP and operating profit growing faster than revenue.For investors, though, the near-term pain looks set to continue. "I believe that we will continue to see a broad-based profit decline across business units in 2013," said Whitman. "The good news is that the bulk of the profit decline should be contained within Enterprise Services," she added. HP CFO Cathie Lesjak also delivered the company's fiscal 2013 outlook during the analyst event. Excluding items, the Palo Alto, Calif.-based firm expects earnings of $3.40 to $3.60 a share, well below Wall Street's estimate of $4.18 a share. HP's estimate excludes after-tax costs of $1.30 a share related to the company's restructuring charges, amortization of assets and acquisition charges. "We expect continued weakness in the macro environment, especially in EMEA (Europe, the Middle East and Africa) and globally, in consumer," noted Lesjak, predicting a year-over-year revenue decline in all of HP's business units, expect software. The CFO also predicted that HP's Enterprise Services business could experience an 11% to 13% decline compared to fiscal 2012. Investors were clearly concerned by the numbers, pushing HP's shares down 11% to $15.26 in late afternoon action on volume of more than 102 million, nearly five times the issue's daily average. The stock was already off more than 30% since the start of 2012.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV