Sales in two key areas, personal computers and printer ink, were severely affected as consumer cut their technology spending budgets well beyond the wretched holiday season.
HP’s revenue report
The Palo Alto, California based company reported that sales of desktops, notebooks and printers in the second quarter ended April 30 fell by double-digits. The company’s total net revenue was $27.4 billion whereas the net income was $1.7 billion.
HP's outlook was not optimistic with the chief financial officer, Cathie Lesjak, saying that it's still "too tough to call" whether PC sales have hit a bottom. The projection from HP is that PC sales will be “flat to slightly higher” for the rest of the year.
The world's No. 1 seller of PCs now expects full-year revenue to fall between 4 percent and 5 percent, worse than its previous projection of 2 percent to 5 percent fall.
Dave Cearley, an analyst at tech consultancy firm Gartner, said of the projections, “HP tends to be conservative with its guidance. There are signs that things are starting to bottom out, and companies are starting to loosen some of their purse strings. IT spending is opening up."
Chief Executive Mike Hurd tends to agree with Cearley in parts. He said, “We see some encouraging signs, and we saw some slight improvements with the U.S. consumer. I'm just not ready to call it better."
Further job cuts expected
The largest technology company in the world confirmed that it would lay off another 6,400 workers, or 2 percent of its 321,000-employee work force.
HP had previously announced that it would cut 24,600 jobs as part of its acquirement of Electronic Data Systems. HP had acquired the latter, a technology services provider, last year for $13.9 billion.
Referring to the fact that such job cuts would result in tremendous cost savings, Hurd said that "the vast majority of cost savings are ahead of us."
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