Hewlett-Packard Co gave a disappointing outlook for full-year revenue and said it will lay off another 2% of its workforce as consumers and businesses cut spending on computers, printers and services, sending its shares down about 5%.
The mew round of layoffs - which total roughly 6,400 jobs - announced on Tuesday are on top of previously announced cuts from integrating the operations of IT services company EDS, which HP acquired last year.
HP said the job cuts will come in its product segments, such as PCs and printers. The reductions will happen over the next 12 months.
HP, which vies with smaller rivals Dell Inc and Acer Inc in a depressed global PC market, also expects fiscal year revenue to slide 4% to 5% compared with a previously forecast of 2% to 5%, offering a more pessimistic view of 2009.
The company's services business was the largest by revenue in the quarter, boosted by the EDS buy. PC revenue fell 19%, imaging and printing revenue dropped 23% and storage and server sales sank 28%.
Analysts said the company is doing a good job controlling costs in a difficult environment, but said investors may be spooked in the absence of more upbeat comments from Chief Executive Mark Hurd.
Although Hurd did point to pockets of improvement, he told Reuters in an interview that in terms of demand: “We're expecting roughly more of the same.”
Frost & Sullivan analyst Ron Gruia said Hurd is approaching the demand question very carefully.
“He does show a little bit more cautiousness and maybe it's better to be a bit more cautious in this environment.”
The shares of the technology bellwether, which some analysts deem a safe haven in the downturn because of its diverse portfolio, fell as much as 5% in after-hours trading.
HP's stock is roughly flat for the year, compared with a 25% rise for International Business Machines Corp and a rise of more than 10% for Dell.
HP reported a net profit of $1.7 billion, or 70 cents a share, in the fiscal second quarter ended April 30, down from $2.1 billion, or 80 cents a share, a year ago.
Excluding certain restructuring and acquisition-related items, HP posted a profit of 86 cents a share, matching analysts' average forecast, according to Reuters Estimates.
Revenue slipped 3% to $27.4 billion, a whisker off Wall Street's forecast of $27.5 billion.
For the current quarter, HP forecast earnings, excluding items of 88 cents to 90 cents a share, with revenue flat to down 2% sequentially.
Wall Street is forecasting a profit of 89 cents a share on revenue of $27.5 billion.
In February, HP cut its full-year outlook after quarterly revenue missed expectations.
For fiscal 2009, the company still expects an adjusted profit of $3.76 to $3.88 a share, but now expects revenue to fall 4% to 5%.
HP is the second-largest IT services company and No. 2 maker of servers, trailing IBM in both.
The company is the top-selling PC maker and its business is less dependent on corporate customers than No. 2 player Dell.
According to research group IDC, HP managed to boost its market share to 20.5% in the first calendar quarter.
Some industry executives, including from Intel Corp and graphics chip maker Nvidia Corp, say overall tech sector demand has bottomed out and expect sales to pick up.
But this week, executives from other IT players, including microchip maker Advanced Micro Devices Inc and software services provider Sybase Inc offered dour assessments of the economic environment, warning against betting on a tech sector recovery too soon.
The shares of Palo Alto, California-based HP fell about 5% to $34.72 from a regular close of $36.58 on the New York Stock Exchange. (Reuters)