Hewlett-Packard CEO warns of ‘another tough quarter’ ahead
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Hewlett-Packard CEO Leo Apotheker warned his top leadership that the tech giant is set to face ‘another tough quarter’ in the three-month period ending in July, according to a leaked memo.
Apotheker’s memo warned top HP execs to ‘watch every penny and minimize all hiring’ and said the firm’s current workforce plans were ‘unaffordable given the pressures on our business,’ according to Bloomberg, which obtained the memo.
The chief executive wrote that ‘Q3 is going to be another tough quarter, one in which we will be driving hard for revenue and profit,’ Bloomberg said. ‘We have absolutely no room for profitless revenue or any discretionary expenditures.’
The news of Apotheker’s gloomy outlook for HP wasn’t assuring to investors, Times columnist Tom Petruno wrote on our sister blog Money & Company.
‘Technology shares got the worst of it Monday as some investors continued to pull back from risk-taking after stocks’ phenomenal run-up of the last eight months,’ Petruno wrote, describing the Bloomberg report as a ‘bomb after the market closed.’
In after-hours trading, HP shares were down as much as 4.8%, or $1.91, to $37.89. That was after already declining 61 cents to $39.80 in regular trading, Petruno wrote.
From Petruno’s report:
Even before the Bloomberg report hit the newswires the tech sector was leading the broader market lower. The tech-dominated Nasdaq composite index (charted at left) fell 46.16 points, or 1.6%, to 2,782.31, its biggest one-day percentage decline since March 16, when markets were reeling from worries about the economic effects of Japan’s earthquake. Also Monday, Amazon.com slumped $10.05, or 5%, to $192.51; Google slid $11.13, or 2.1%, to $518.42; and Apple gave up $7.20, or 2.1%, to $333.30. By contrast, the blue-chip Standard & Poor’s 500 index eased 0.6% for the day, to 1,329.47.
Declines like those contribute to Wall Street’s losing steam after its major market indexes reached their highest points in years on April 29, Petruno noted. And the investment concerns aren’t limted to the tech industry.
‘Weaker-than-expected U.S. economic data in recent weeks have raised fears that the recovery could be flagging,’ he wrote. ‘That has fueled selling in stock sectors that would be most vulnerable to slower growth, including industrial, financial and tech issues.’
To read Petruno’s full post on how HP’s outlook and the performance of other companies and industries are worrying investors, head over to ‘Hewlett-Packard warning threatens already jittery tech investors’ on Money & Company.
[Updated 5:58 p.m.: An earlier version of this post incorrectly stated that Apotheker warned top HP execs of ‘another tough quarter’ in a three-month period beginning in July. The quarter Apotheker referenced in his memo ends July 31.]
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-- Nathan Olivarez-Giles