HP sees profits plummet

meg-whitmanThe maker of expensive printer ink, HP, has surprised the cocaine nose jobs of Wall Street by telling them that its quarterly revenue fell in almost every business segment over the year.

The numbers highlight weaknesses in the company ahead of the company’s planned 2015 separation of its enterprise services from its traditional computer and printing units.

Sales fell 2.5 percent in the fourth quarter to $28.41 billion, from $29.13 billion a year earlier, HP said. Analysts had expected $28.76 billion. Profit declined 2.7 percent to $2.01 billion.

Chief Executive Meg Whitman cryptically told analysts that she said that “turnarounds were not linear” which will be news to any driver who uses a roundabout or attempts a three point turn.  She insists that after three years of her rule, HP is exactly where she thought it would be.

The enterprise group and enterprise services, areas that Whitman had previously flagged as growth drivers, showed revenue declines of four percent and seven percent.

On the call, Whitman said she expected a slower decline in enterprise revenue next year. Enterprise services would be the biggest “swing factor” in the company’s 2015 growth projections, she said.

The company’s personal computer division grew by four percent after a 12 percent jump in the prior quarter. Much of the growth in PCs was driven by a Microsoft decision to quit supporting older software, and Whitman said that was pretty much over now.

The high-margin printer business shrank by five percent.

Whitman is pinning her hopes on splitting the company into two next year, separating its computer and printer businesses from its faster-growing corporate hardware and services operations, and eliminating another 5,000 jobs as part of its turnaround plan.

“This separation was totally the right thing to do for this company,” Whitman said. “It is remarkable how it focuses the mind on overhead.” Well if turnarounds are not linear then you have to keep an eye on what is above you otherwise a turnaround might fall on you.