HP delivers a mixed bag for Q3 amid big leadership changes

HP delivers a mixed bag for Q3 amid big leadership changes

Summary: CEO Meg Whitman is consolidating the marketing and communications groups, among other movements in the C-suite.

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Revenue drops and executive changes were all expected to be on deck as Hewlett-Packard reported third quarter earnings after the bell on Wednesday.

See also: HP: Q3 likely to show more revenue erosion

The tech giant reported a net income of $1.4 billion, or 71 cents per share (statement).

Non-GAAP earnings were 86 cents per share on a revenue of $27.2 billion.

Wall Street was expecting HP to report a third quarter non-GAAP profit of 86 cents a share on revenue of $27.3 billion.

HP shares slipped slighly by 2.5 percent in after-hours trading.

CEO Meg Whitman looked at the glass half full (translation: hitting the EPS target) in prepared remarks:

We once again achieved the financial performance we said we would, delivering $0.86 in non-GAAP diluted earnings per share, within our previously provided outlook of $0.84 to $0.87. I remain confident that we are making progress in our turnaround. We are already seeing significant improvement in our operations, we are successfully rebuilding our balance sheet, our cost structure is more closely aligned with our revenue and we have reignited innovation at HP, with a focus on the customer.

Here is how Q3 revenue results played out by department, and at least one pattern is fairly obvious here:

  • Personal Systems: Down 11 percent, year-over-year
  • Printing: Down four percent, year-over-year
  • Enterprise Group: Down nine percent, year-over-year
  • Enterprise Services: Down nine percent, year-over-year
  • HP Financial Services: Down six percent, year-over-year
  • Software: Up by one percent, year-over-year
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For the fourth quarter, Wall Street is expecting revenue of $28.12 billion with earnings of at least $1.01 per share.

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HP's Bill Veghte

In Wednesday's report, HP provided guidance for fiscal 2013, projecting earnings to fall between $3.53 and $3.57 per share.

HP shuffles the deck

Earlier in the day, it was also reported that some executive reassignments were on the way and expected to be announced publicly amid Wednesday's report. Names in the mix included chief marketing officer Marty Homlish and Dave Donatelli, head of the enterprise group at HP.

Shortly after the Q3 report hit the wires, HP publicly confirmed the leadership changes. Here's how everything shakes out:

  • HP's chief operating officer Bill Veghte is taking over as executive vice president and general manager of the enterprise group. That role is being expanded to include oversight for HP's cloud portfolio.
  • That unit's previous leader, Dave Donatelli, is moving onto a "new role" focused on identifying early-stage companies with new technologies similar to Moonshot and StoreOnce. He will continue to report to Whitman.
  • HP is combining its marketing and communications teams into one big group led by current CMO Marty Homlish. His new title is "chief customer experience officer." The new role has been set up to focus on "driving more consistent and high-value interactions with customers across all business units."
  • Chief communications officer Henry Gomez take over for Homlish as chief marketing officer, although he will be responsible for overseeing both marketing and communications initiatives.

One piece of the puzzle that still looks missing: HP said that there are "currently no immediate plans to select a new COO after Veghte transitions to his new role."

Slides via HP Investor Relations

Topics: Software, Hewlett-Packard, Enterprise 2.0, PCs, Tech Industry

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8 comments
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  • Donatelli now doing "Special Projects"

    That is corporate code words for "Looking for a new job." And the only new innovation seen at HP is how to "market" the same old stuff by changing fonts and colors on the advert flyers.
    terry flores
  • The ship continues to turn under Whitman

    EPS on forecast as revenue declines, nice job to keep the investors on side. Share price up 75% this year means that they have some room.

    The big challenge for HP, along with IBM & Dell is how to survive the generational shift in server price and volumes as cloud technologies takes over, which explains the move of Veghte into the new role. From what I have seen of Veghte he is a good operator and, with his background, understands the big picture of the IT game.
    paddle.
    • IBM should have no serious trouble. This is the field they have been in

      for years.

      new servers used for anything, from supercomputers to clout (which really is just another name for a supercomputer service).
      jessepollard
  • That murmur you hear is the HP board of directors...

    ..repeating the infamous words of Peter Griffin: "Shut up, Meg!"
    daftkey
  • Meg Whitman an unquestionable leader

    Never in the next history of Hewlett Packard will have had such an important paper the CEO (Meg Whitman), she is making an authentic ineficiencia cleaning in the directive dome of the company, the feminine intuition is transformed into decisive factor, this time is not Carly Fiorina that "put one´s foot in it" in some big decisions that she made, while it squandered the patrimony of HP with considerable representation expenses.
    I am convinced that in the next trimesters, Meg will give us good news on the march of the company and to get solvent new partners of HP in the business IT.
    It is necessary that it is these moments Meg Whitman she receives the whole support of the employees of HP, something basic to strengthen the faith in the brilliant future of the company and the self-esteem of Meg.
    luis river
    • yeah maybe

      Meg is just one person. She does have a tone-setting effect I suppose, and so far she has not appeared to make any particular mistakes, but ultimately HP's success lies more upon what we are offering to the customer than what Meg can say in a dog-and-pony-show for Wall Street.
      I really want for the days of Bill and Dave where they basically did not give a crap about what Wall Street thought, and got their own capital from other sources when they needed it. That said, I do agree with Meg that "focus on customers" is where we should be paying a lot more attention, and that includes "figuring out what they want to buy" and making it, marketing it, and supporting it, better than anybody else.
      These days the corporate culture pays far too much attention to doing Wall Street schmoozing and not enough CUSTOMER schmoozing for my taste.
      tavent
  • Unusual to see this

    Any time I see a company combining "marketing" with "communications," I know we've got a CEO who thinks that marketing is about advertising and PR. It's a good time to sell the stock, because it means that nobody in the place is in charge of thinking up new stuff.

    But in this case, HP seems to know that. They've even appointed someone to hunt down new stuff outside the company, since they realize it's not happening inside.
    Robert Hahn
  • Queen Meg and "leadership" are anti-customer

    I made the mistake of sending my daughters laptop to HP for sevice after about 30 hours of their online tech service showed it was a hardware issue. It was to have the CPU replaced and be shipped next day to and from. Well, that proved to be more than they could comprehend because they he installed the software. Then they shipped it ground, 4 days instead of 1, meaning my daughter who just started college, did so without the laptop, but wait! When I turned it on, BAM! Same problem. I called the tech, made him wish someone else got the call, and arranged to have it fixed correctly and shipped next day both ways. Now, work was done and low and behold, they ship it ground again. I called various HP numbers and found that the Guru's at the HP ivory tower had changed ALL of the service shipping to ground without notifying anyone and that HP was pulling a fast one on the sevice company-the poor guy is losing his job this week thanks to Meg and her cronies.
    Well thanks to the lack of integrity and any form of customer service, my daughter has been without her laptop for her first week and a half at the least because of a company as screwed up and distant as the US Government. They don't seem to understand that word of mouth goes a long way. In my case, contacts across the country. So far they've lost 2 sales because of this and there will be more as I spread the word.
    There are a lot of ways to go as far as computers and peripherals. You may feel differently, but as for me, Meg and her Court can blow it out their, you know. She's the perfect politician. It's all about the money. Once the cash is in hand it's the hell with the customer. Beware and compare before you buy!
    Maybe it was a good thing Captain Chaos (formerly known as Moonbeam) Brown won the Calif Governoers election.
    becomann