HP Forecast Misses Estimates as Consumers Hold Back Spending; Shares Fall By Aaron Ricadela

The Hewlett-Packard Co. logo is displayed on a sign at the company's headquarters in Palo Alto, California. Photographer: Tony Avelar/Bloomberg

 Hewlett-Packard Co., the world’s largest computer maker, forecast second-quarter profit and sales that missed analysts’ predictions as a slowdown in consumer spending throttled growth.

 Excluding some costs, profit will be $1.19 to $1.21 a share this quarter, Palo Alto, California-based HP said today in a statement. Sales will be $31.4 billion to $31.6 billion. That compares with profit of $1.26 and revenue of $32.6 billion, the average estimates of analysts surveyed by Bloomberg. 

 Consumers are holding back spending on computing products, keeping Chief Executive Officer Leo Apotheker from exceeding analysts’ predictions in his first quarter at the helm. HP, which gets more than a third of its sales from Europe, the Middle East and Africa, was also affected by a slow recovery there.

 Investors are waiting for Apotheker, who took over Nov. 1, to present his strategy at an event for reporters and analysts in San Francisco on March 14. Former HP CEO Mark Hurd, who left last August, had cut costs to boost HP’s profitability and stock price during his five-year term.

 HP fell in extended trading. The shares, which had climbed 15 percent this year, closed at $48.23 at 4 p.m. in New York Stock Exchange composite trading today.

First Quarter

 Fiscal first-quarter profit rose to $2.6 billion, or $1.17 a share, from $2.25 billion, or 93 cents a share, a year earlier. Sales rose to $32.3 billion in the period, which ended Jan. 31. Analysts in the Bloomberg survey were projecting profit of $1.29 and sales of $33 billion on average.

 Apotheker and Chairman Ray Lane have reshaped HP’s board, are using acquisitions to expand in software, and aiming to strengthen HP’s hand in the burgeoning markets for smartphones and tablet computers.

 On Jan. 20, HP replaced four board members with five new directors selected by Lane and Apotheker, including former EBay Inc. CEO Meg Whitman and former Alcatel-Lucent SA CEO Patricia Russo.

 HP acquired business intelligence software maker Vertica Feb. 14 for an undisclosed amount after discontinuing its own data analysis program called NeoView. Vertica’s customers include Web companies Twitter Inc., Zynga Inc. and Groupon Inc., according to its website.

More Acquisitions?

 “We expect the company to remain acquisitive, focusing on security, systems management and storage companies,” ISI Group analyst Abhey Lamba said in a Feb. 17 report. Lamba, based in New York, recommends buying HP shares. HP is poised to benefit from corporate spending on PCs and servers, he said.

 HP plans later this year to introduce its TouchPad tablet computer based on the WebOS operating system HP gained in last year’s $1.2 billion acquisition of Palm Inc. HP on Feb. 9 also introduced new smart phones running the software.

 Earlier this month, HP said it had stopped making PCs with flawed Intel Corp. chips and put a hold on shipping affected inventory.

 Market research firm Gartner Inc. forecasts that worldwide PC shipments will increase almost 16 percent this year to 409 million units.

©2011 bloomberg.com