HP expects ‘tough third quarter’

CEO tells top brass to brace for “another tough quarter” and to “watch every penny and minimise all hiring”

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HP expects ‘tough third quarter’ Apotheker has told HP management to tighten their belts
By  Daniel Shane Published  May 17, 2011

Hewlett-Packard, the world's largest IT company by revenue, has warned that it faces a difficult 3Q11, and has brought forward reporting of its second quarter results.

A recent memo sent to HP management by CEO Leo Apotheker, and seen by Bloomberg, urged managers to "watch every penny and minimise all hiring" and that HP executives were bracing themselves for "another tough quarter".

"Q3 is going to be another tough quarter, one in which we will be driving hard for revenue and profit," Apotheker wrote. "We have absolutely no room for profitless revenue or any discretionary expenditures."

HP was due to report its second quarter results on the afternoon of May 18, but the company has now brought this forward to the morning of May 17. HP's second quarter reporting period ended on April 30, and its third quarter closes on July 31.

On evidence of HP's 1Q11 results, the vendor has experienced weak demand in its IT services and consumer PC businesses, with sales in these units sliding 1% and 2% year-on-year, respectively. These divisions are HP's largest in terms of revenue generation.

HP's 1Q11 was the first quarter with former SAP chief Leo Apotheker at the helm. He replaced former CEO Mark Hurd, who left the company following an internal probe into his expenses claims.

One area where HP is anticipating a detrimental impact on its performance is in its networking segment in the Middle East. The vendor's EMEA VP for networking, Carlos Sartorius, conceded that business had suffered as a result of political turmoil in the region.

"It has impacted the business - they're not buying," he told ITP.net in an interview. "In Egypt, we had great traction in a number of different segments and commitments on orders, but then everything stopped."

"It had an impact that was noticeable on the overall number," Sartorius continued. "The region is MEMA (Mediterranean, Middle East & Africa), and it had a very significant impact - the fact that we couldn't ship - in the last quarter, the quarter that we just finished."

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