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Hewlett-Packard (HPQ) turned in strong second-quarter earnings today but warned of lower growth this year, due to soft sales of consumer PCs and disruption caused by an earthquake and tsunami in Japan.
HP's earnings announcement came a day earlier than scheduled because of a leaked memo from the Palo Alto company's chief executive.
Though the leaked memo spoke of "a new head count plan," HP CEO Leo Apotheker said in a telephone conference with reporters, "I don't want anyone to read into this that there will be head count reduction across the board."
The memo, he said, reflects "prudent steps" being taken "to manage in the face of headwinds we are seeing, particularly as the result of the Japan crisis and some softness in the consumer PC business."
In the e-mailed memo to top executives of the company, HP's chief warned that the company's head count in the second quarter of 2011 was "unaffordable given the pressures of our business."
Pressed on the contents, Apotheker said "these memos should not be a distraction. "... The first thing I want everyone to clearly understand is we actually delivered a strong quarter."
He said he was "disappointed" in the leak. "I expect these memos to be kept confidential,
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and not be circulated around."
Expressing dissatisfaction with the performance of the company's business services efforts, Apotheker announced a reorganization to gain market share. He said HP's services business had been "drifting" toward low growth and low-margin activities, and had missed market opportunities.
HP will invest in that business for long-term growth in market share, he said.
"The forces of the cloud and conductivity are changing the world of technology and creating exciting new opportunities," he said. "Companies need to evolve their strategies aggressively during this technology shift," he said in an earlier conference call with analysts. "That is exactly what we're doing."
While there was weakness in the consumer PC market, Apotheker said, the commercial market remained strong.
The company's tablet PC will debut this summer.
HP's earnings of $2.3 billion, or $1.05 a share, for its second quarter, ending April 30, were above the same quarter last year. The company earned $1.24 a share, and revenue was up 3 percent to $31.63 billion.
But the computer and software giant has reduced expected earnings for the year to $5, which falls below earlier forecasts of $5.20 to $5.28 a share.
It also lowered 2011 revenue guidance slightly, to between $129 billion and $130 billion, and forecast adjusted earnings of $108 a share and revenue between $31.1 billion and $31.3 billion.
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