HP Drops Quarter Forecast, Hints at Layoffs

By Jessica Davis  |  Print this article Print

HP CEO Leo Apotheker hinted at headcount reductions and layoffs in a memo to his top executives and then pulled forward HP's earnings announcement after the memo was leaked to Bloomberg.

HP (NYSE:HPQ) CEO Leo Apotheker hinted at layoffs in a memo to top executives and then pulled the company's earnings announcement forward by a day after that memo was leaked and a story published by Bloomberg. The HP layoff news comes a week after Cisco (NASDAQ:CSCO) CEO John Chambers promised $1 billion in cost cutting by October, including workforce reductions.

HP, announcing results a day early, revised its third quarter and full year forecast down on the market effects of the earthquake in Japan and softness in the consumer PC business as well as lower-than-expected profitability in services.

HP cut about $1 billion from its full year revenue forecast, saying it now expects full year revenue in the range of $129 billion to $130 billion. Third quarter revenue is now expected to be between $31.1 billion to $31.3 billion.

For the second quarter HP reported revenue of $31.6 billion, up 3 percent from the same period a year ago or 1 percent when adjusted for the effects of currency.

Here's a quick look at how HP's business units did:

  • Personal Systems Group – revenue down 5 percent year over year with a 5.7 percent operating margin. Commercial Client (PC) revenue growth was 13 percent. Consumer Client revenue declined 23 percent.
  • Imaging and Printing Group – revenue up 5 percent year over year with a 17 percent operating margin.
  • Services – revenue up 2 percent year over year with a 15.2 percent operating margin. "To improve long-term performance, HP is accelerating alignment of the services business with the company's overall strategy, including making investments to drive more value-added solutions and migration to the cloud," the company said in a statement
  • Enterprise Servers, Storage and Networking - revenue up 15 percent year over year with a 13.8 percent operating margin.
  • HP Software - revenue up 17 percent year over year with a 20.2 percent operating margin. HP Software revenue was driven by strong growth in licenses and services of 29 percent and 22 percent, respectively.
  • HP Financial Services - revenue grew 17 percent year over year with a 9.4 percent operating margin. Financial Services results included a double-digit growth in lease volume.


Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com