Amwal Al Ghad English - 2014-05-24 07:44:08
Chief Executive Officer Meg Whitman, still struggling to turn around Hewlett-Packard Co. (HPQ), is opting for more job cuts, a move that boosted shares the most in six months.
After reporting an 11th straight quarter of declining sales, Whitman is propping up profit by paring as many as 16,000 more employees, on top of 34,000 already announced. While she has stabilized Hewlett-Packard after years of management upheaval and presided over a 39 percent share climb since taking over in 2011, the company is facing its third straight drop in annual revenue.
Consumers are buying fewer personal computers and printers as they embrace smartphones and tablets, and companies are opting to use more software via the Internet or building their own machines. By shedding workers, Whitman is lowering expenses, which will free up cash for investment in new businesses and enable her to report better profit.
“It clearly gives them more cushion to work on the revenue growth,” said Abhey Lamba, an analyst at Mizuho Securities USA Inc., who has the equivalent of a hold rating on the stock. “It’s going to be challenging to deliver that revenue growth.”
Profit excluding certain costs in the period ended April 30 was 88 cents a share and revenue fell 1 percent to $27.3 billion, the Palo Alto, California-based company said in a statement yesterday. Analysts had on average predicted profit of 88 cents and sales of $27.4 billion, according to data compiled by Bloomberg. More»