22nd November 2011
Hewlett-Packard has announced a staggering 91% drop in fourth-quarter profits in 2011, following the company’s decision in August to drop under-achieving WebOS hardware in order to focus on future software and cloud computing infrastructure.
As first reported via BBC Business, profit has dropped from $2.5bn on total sales of $32.5bn in Q4 2010 to just $200m on sales of $32.1bn.
However, much of the decline in profit was thanks to the hit taken by dropping the company’s tablet and smartphone divisions, which included the withdrawal of the TouchPad tablet, a product that was in shops for just 49 days.
And with a new CEO, Meg Whitman in charge following previous CEO Leo Apotheker’s very public firing, HP were still resolute about their current market position.
"HP has a great opportunity to build on our strong hardware, software, and services franchises with leading market positions, customer relationships, and intellectual property," said Ms Whitman.
"We need to get back to the business fundamentals in fiscal 2012, including making prudent investments in the business and driving more consistent execution."
Since taking charge at the end of September, Whitman has been responsible for the reversal of many of Leo Apotheker’s previous planned moves for the company, including a potential spin-out of the company’s PC division.
However, she remains resolute about others, including the expected completion of the $7bn buy-out of UK software company Autonomy, a deal BBC reports to have been overvalued by as much as £6bn.
But in what respect Autonomy is likely to be used by HP is still unknown. When the deal was announced in August, it was thought likely HP would scrap hardware altogether to concentrate on Autonomy’s software expertise and future cloud computing infrastructure integration, but with the PC division reversal this is now uncertain.
According to Bloomberg, “Hewlett-Packard will make a decision about what to do by early December” but this leaves little time to map out a new strategy when Whitman has already admitted the deal had helped create “confusion among many of our shareholders about what kind of company HP is.”
And the near future is also likely to be dogged by what the new CEO expected would be a difficult 2012.
“We’re relatively pessimistic about the economic outlook in two of our three major regions,” Whitman said. “2012 just looks tough to me.”
One cited region, according to Yahoo! News, was Europe, which HP has already lowered its sales forecast for in 2012.
"The consumer was weak all year for us and commercial weakened in the third and fourth quarter," Whitman added, yesterday.
She also cautioned that new forecasts probably still don't reflect what would happen if there was "a complete meltdown in Europe", something that would dramatically affect plenty of other global businesses as well as HP.
Related stories: Whitman takes charge as new CEO of HP
HP chooses software and cloud over hardware in $7bn deal
Tags: infrastructure as a service | software as a service | mobile cloud
