Management, business issues weigh on HP

HP earnings plummet as a new CEO takes the helm

Hewlett-Packard continues to struggle with leadership and business changes, reporting on Monday that fourth quarter net earnings dropped 91 percent over last year.

The news comes just as Meg Whitman, former eBay chief, takes the helm at HP, reversing some decisions made by her predecessor, Leo Apotheker. She recently announced plans to keep HP's struggling PC business, after Apotheker had made plans to sell it or spin it off.

Net earnings for HP in its fourth quarter were US$200 million, down from $2.5 billion in the same period last year. Diluted earnings per share were $0.12, down 89 percent from $1.10 in 2010.

Net revenue dropped 3 percent in the fourth quarter to $32.1 billion from $33.3 billion in the fourth quarter a year ago.

HP's software group performed the best during the quarter, boosted by growth in licenses and services, with revenue up 28 percent compared to 2010. Financial services revenue also did well, growing 18 percent.

Services revenue at HP grew 2 percent, hitting $9.3 billion for the quarter. But the company's enterprise servers, storage and networking group posted a 4 percent revenue decline over last year, and imaging and printing was down 10 percent year over year.

HP's personal systems group, which includes computers, declined 2 percent, to $10.1 billion. A month ago, HP did an about-face, announcing it would keep its PC business.

Investors are likely keen to see some stability at HP after the revolving door at the top of the company. Whitman, who is perhaps best known for her time as CEO at eBay, took over for Apotheker in September after he served for under a year. Apotheker replaced Mark Hurd, who was ousted after allegations of sexual harassment.

HP, under Apotheker, decided to quit selling phones and tablets based on WebOS, the software it bought along with Palm. When HP dropped the price of the TouchPad tablet to clear inventory, a buying frenzy followed. Recent rumors suggest HP is close to coming to a decision about what to do with the WebOS software.

For the full year, HP reported net earnings of $7.1 billion, down from $8.8 billion last year. Net revenue for its fiscal 2011 was $127.2 billion, down from $126 billion last year.

For the first quarter of fiscal 2012, HP is hoping for diluted EPS in the range of $0.61 to $0.64.

The company plans a conference call to further discuss the results with analysts this afternoon.

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