HP warns investors to expect a rocky 2013; stock tanks
Maybe it's a good thing the webOS GBU is going to be
divorcing splitting itself from HP, as the parent company is gearing up for a year that even has pessimistic analysts and investors caught off guard. HP today issued guidance for fiscal year 2013, expecting profits to come it at $3.40-$3.60 a share, which is well under the $4.16 average guesstimate given by the analysts that cover HP. Normally those analysts aren't far off, but a miss this big is cause for alarm - as indicated by the nearly 13% drop in HP's share price today.
The drop in earnings is expect to be a "broad-based profit decline", i.e. HP expects a drop in profit across their entire business (enterprise services in particular is expecting the coming year to have revenues lowered by 13% and profits at next to nothing). In a weird statement, according to Business Insider, HP CEO Meg Whitman told investors that the company will be "more contained" in 2013. Whatever that means. By 2016, HP expects their revenues "to be growing in line with gross domestic product" with profits growing faster than that, thanks to "industry-leading margins and disciplined capital allocation." In other words, HP wants to operate on a fiscal sense more like Apple (high margin, low cost), though for that to happen they'll have to continue to make significant changes to the way they do business, starting by making all of their products more desirable.