There’s more bad news for troubled tech giant HP this week. The company has had to revise its earnings forecast for fiscal 2013 to $3.40-$3.60 per share, which is well below analyst estimates of $4.16. After CEO Meg Whitman shared the bad news about the company's earnings expectations at its recent analyst meeting, the company’s stock plummeted.
Shares fell 12 percent, hitting a nine-year low.
Whitman warned analysts that HP will experience "broad-based profit decline," but said the company will be "more contained" than in fiscal year 2012, Business Insider is reporting this week.
Whitman discussed a multi-year turnaround (calling 2012 a “fix and rebuild” year) and promised that it will complete its savings targets and restructuring by the end of fiscal 2014. She pointed to fiscal 2015 as the company’s “year of acceleration” and said she expects the company's revenue to be "growing in line with gross domestic product" by 2016.
The company plans to eliminate some 29,000 jobs next year to try and save some $3.3 billion. In August, the company also announced an $8-billion write-down, due to a goodwill impairment on its $13.9 billion EDS (News - Alert) acquisition.
The drop in shares wasn’t HP’s first as of late. The company’s shares already have contracted more than 40 percent this year, and Wednesday’s plummet was the largest one-day percentage drop since last August.
Sterne Age analyst Shaw Wu told MarketWatch the forecast was “much worse than expected … There was hope they would guide to $4 in EPS, keeping it flat.”
Barclays analyst Ben Reitzes wrote that H-P’s guidance “will likely exacerbate concerns about the structural headwinds ahead of H-P.”
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