Hewlett-Packard Co, the world's No. 1 computer maker, on Tuesday cut its financial forecasts due to problems stemming from Japan's earthquake, soft PC sales and reduced expectations for its services business.
The following are comments from investors and analysts.
SHAW WU, ANALYST, STERNE AGEE
The guidance is disappointing -- the quarter itself is decent. It looks like they are citing weakness in consumer PCs, services and Japan. Some of this is not a complete surprise, the magnitude of the impact definitely is. This is a 'show me' story. They need to string together some strong quarters to regain investor confidence.
TRIP CHOWDHRY, ANALYST, GLOBAL EQUITY RESEARCH
We have to keep a focus on why these numbers are down and why HP is in a difficult situation. Every hardware maker is in a difficult situation.
Customers are pulling back on IT spend. Hardware spend is discretionary. Software is not. Until oil prices come down, hardware spend is not going to pick up. That is going to impact across the board.
SHANNON CROSS, ANALYST, CROSS RESEARCH
Clearly this quarter was fine. Management's tone on the call is going to be incredibly important. People are going to need to know if this reset is it, or if this is the first step in a process.
Consumer PC weakness is clearly a problem. It sounds like (CEO) Leo (Apotheker) is realigning the services businesses. It sounds like (previous CEO Mark) Hurd took too many costs out of that business and didn't reinvest in positioning it in cloud and other things. Leo is doing that now.
This is the second quarter in a row where there has been issues in the earnings.
Leo is working with the assets he was handed. I suppose the question is 'Could somebody have moved faster?' I don't know. they are trying to build a long-term, solid, stable business. That doesn't happen overnight.
SAL ARNUK, CO-MANAGER OF TRADING, THEMIS TRADING
HP results were worse than expectations. They blame the Japanese, and the market is not appreciating it. Investors will now be closely looking at other big names like Dell to see if this (the weak results) is a trend (in the industry) or if this is just isolated to certain companies.
BRIAN MARSHALL, ANALYST, GLEACHER & CO
The quarter was good, July guidance and fiscal year 2011 guidance are dismal. They are basically taking $1 billion to $1.5 billion out of the revenue forecast and lowered EPS expectations as well.
There's a couple of things concerning here, number one, HP has been known historically for consistency. Now they are known for inconsistency. This leaked internal memo, having to change their earnings call -- it's not what you would expect.
It's a little bit out of control. Hopefully we can get some stability before too long. It could become a value trap and it appears it could be headed down that path.
(Reporting by Jennifer Saba, Angela Moon and Jim Finkle)