By Steve Johnson, San Jose Mercury News –
SAN JOSE, Calif. — In a pep talk to bolster investor confidence in Hewlett-Packard, CEO Meg Whitman on Wednesday told analysts the troubled company is making progress with new products, streamlining its operations and getting its costs under control.
But she warned the Wall Street experts gathered in San Francisco that her efforts are being hindered by what she said was “a worsening macroeconomic environment,” and repeated her previous prediction that it could take four to five years to turn around the corporation.
“It’s going to take longer to right this ship than anyone would like,” said Whitman, who was named the company’s president and CEO last September. Noting that the company has been beset by numerous problems, many caused by its frequent shifts in leadership, she added, “I believe all of this is fixable, but it’s going to take some time.”
But many industry observers have expressed deep concerns about how long it will take to revive the Palo Alto, Calif., technology giant. HP’s share price plunged almost 13 percent Wednesday to close at $14.91.
Whitman is the fourth CEO since 2005 at HP, which has seen sales flatten in the past couple of years and its profit slip. In August, it reported its biggest quarterly loss ever — $8.9 billion, much of it due to a write-down of its 2008 acquisition of tech services provider EDS.
Whitman has attempted to rein in expenses by jettisoning 29,000 employees over the next two years — the company’s biggest workforce reduction ever. But despite earning praise for her efforts so far, which have included shuffling its management ranks and some divisions, investors have cooled toward the company.
HP offers a wide mix of products ranging from networking switches, routers and data storage devices to calculators, software and printers. It’s also the world’s biggest computer maker. But its PC business faces increasing pressure from smartphones and tablets.
Although it briefly offered smartphones and a tablet based on technology it obtained from its 2010 purchase of Sunnyvale, Calif.-based Palm, those devices sold poorly and their production was quickly halted. Whitman last month told the Fox Business Channel that HP is again developing a smartphone, and on Monday the company introduced a tablet it dubbed the ElitePad 900, aimed at business and government customers.
But JPMorgan analysts believe HP is too far behind other smartphone and tablet makers to catch up, and that the company should sell its PC and printer division.
Noting the gloomy global economic prospects, analysts at investment bank Needham & Co., added in recent note to their clients that “we are deeply troubled by the events at HP and within the broader PC landscape.”