HP Releases Gloomy Financial Results, Vows to Ramp up Services

Hewlett-Packard (News - Alert) Co. expects weaker financial results this year as it rolls up its sleeves to redo its services business to undo what its CEO described as “years of neglect” under his predecessor.

CEO Leo Apotheker charged that HP was too focused on short-term results, rather than expanding into high-margin areas, “such as helping businesses convert their systems to new technologies,” the AP reported. Apotheker, who became CEO in November, said HP would now “execute” a strategy laid out years ago to focus on the high-margin areas.

According to The Register (News - Alert), Apotheker “had to move up Hewlett-Packard's reporting of its financial results for the second quarter of fiscal 2011 by 32 hours because someone leaked a memo about belt-tightening and looming layoffs that Apotheker sent to his top brass two weeks ago.”

Under the previous CEO, Mark Hurd, who now works for Oracle (News - Alert), HP, the world’s largest PC maker, “more than doubled its services portfolio with the acquisition of Electronic Data Systems for $13.9 billion,” and services “now account for 28 percent of HP's revenue, nearly as much as the PC business,” the AP noted.

As The New York Times put it, “The company said that sales of personal computers fell 5 percent, to $9.4 billion. Revenue for the unit that includes printers rose 5 percent, to $6.7 billion. A 23 percent decline in consumer computer sales far outweighed a 13 percent increase in sales to businesses.”

HP's shares are trading down 7.4 per cent, to $36.83, as of late Tuesday afternoon.

The Register noted that Technology Services business “is being moved over underneath Dave Donatelli, general manager of HP's Enterprise Servers, Storage, and Networking business -- which is where it belongs, really.”

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