HP sees further drop in profits in FY 2012

HP reported revenues for its fiscal fourth quarter to October down 3 percent from a year earlier to USD 32.1 billion. The operating margin dropped to 2.5 percent from 9.7 percent a year ago, and EPS plunged 89 percent to USD 0.12. Net profit fell to USD 0.2 billion from USD 2.5 billion a year ago, hurt by some USD 2.1 billion in one-time charges for winding down the webOS business, impairments, restructuring and acquisitions. The PC division Personal Systems was the weakest performer, with an operating margin of 5.7 percent and sales down 2 percent, led by a weak consumer market. HP's services revenue was up 2 percent from a year earlier and generated a margin of 12.8 percent, and the software division posted revenue up 28 percent and a margin of 27.7 percent. Enterprise Servers, Storage and Networking revenue declined 4 percent year over year with a 13.0 percent operating margin. Networking revenue was up 5 percent, servers revenue was down 4 percent, business critical systems was down 23 percent, and storage revenue was up 4 percent. HP generated cash flow from operations of USD 2.4 billion in the quarter and finished October with total cash of over USD 8 billion.. For the first quarter of fiscal 2012, the company forecast EPS of USD 0.61-0.64. For the full year, HP expects EPS of USD 3.20, down from USD 3.32 last year. New CEO Meg Whitman said the company needs "to get back to the business fundamentals in fiscal 2012, including making prudent investments in the business and driving more consistent execution".