HP lowers financial guidance with webOS shutdown

HP's stock drops on news it will discontinue webOS and look to spin off its PC group

After pulling the plug on its webOS phones and tablet computers Thursday, Hewlett Packard said it expected to be less profitable than expected during its current fiscal quarter, which ends Oct. 31.

The company announced earnings Thursday that were on the low side of analyst expectations, numbers that were largely overshadowed by the company's dramatic decision to pull out of the tablet market altogether and to consider options for either spinning out its PC group or putting it up for sale.

Going forward, HP said that fourth-quarter revenue will be between $US32.1 billion and $32.5 billion, and that earnings per share will be in the $1.12 to $1.16 range, excluding charges from the webOS shutdown. The market had been expecting earnings of $1.31 on sales of $34 billion, according to a survey of analysts by Thomson Reuters.

The shuttering of webOS will cost between $0.61 and $0.68 per share, HP said.

Earnings for HP's third quarter, ended July 31, were $1.10, on revenue of $31.2 billion, up from $30.7 billion in the third quarter of 2010. Both of those numbers were in line with market expectations.

HP also confirmed that it is in discussions to buy analytics software vendor Autonomy, a deal reportedly valued at $10 billion.

HP released some financial information earlier than expected Thursday after media reports of the PC sell-off and Autonomy acquisition surfaced. It is scheduled to release fourth quarter results later on Thursday.

Traders didn't like the news. HP's stock (HPQ) was down more than 7 percent, trading at $29.14 late Thursday on a down day in the markets. Late Thursday the Dow Jones Industrial Average had dropped more than 4 percent.

Robert McMillan covers computer security and general technology breaking news for The IDG News Service. Follow Robert on Twitter at @bobmcmillan. Robert's e-mail address is robert_mcmillan@idg.com

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Tags business issuesservicesstoragesoftwareHewlett-Packardhardware systemsrestructuringSEC Filings

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Robert McMillan

IDG News Service
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