HP disappoints, misses Q3 estimates

13 Aug 2004

Poor storage and server sales have been blamed for disappointing third quarter results at Hewlett-Packard (HP) that have fallen short of analysts’ expectations. HP CEO Carly Fiorina responded with a management reshuffle, replacing three senior executives in Europe, America and overall enterprise sales.

HP reported earnings of US$586m or 19 cents a share, significantly ahead of earnings of US$297m reported during the same quarter last year. Excluding a write-off of assets and other acquisition related charges, HP reported earnings per share of 24 cents, up from 23 cents a share last year. However, analysts had been expecting a return of 31 cents per share.

HP CEO Carly Fiorina acknowledged that problems in various business segments hurt the latest quarterly results, most notably in the server and storage segments.

She said: “Although we are satisfied with our performance in Personal Systems, Imaging and Printing, Software and Services, these solid results were overshadowed by unacceptable execution in Enterprise Servers and Storage. We therefore are making immediate management changes.

“We are also accelerating our margin improvement plans in this business. With these changes, we expect our server and storage business to return to profitability in the fourth quarter,” Fiorina said.

The management changes Fiorina referred to include the replacement of three senior managers. Peter Blackmore, head of enterprise sales will be replaced by Mike Winkler, the company’s current chief marketing officer.

Former services executive Jack Novia will replace Jim Milton as senior vice president and managing director for the Americas Region.

In Europe, Kasper Rorsted, the head of HP’s customer solution group, will be replaced by Bernard Meric who has headed up HP’s imaging and printing unit in Europe.

By John Kennedy