Smartphone exit kills HP's Q4 profits
Quarter and full year hit by $2.1bn charge, mainly for closing the webOS division, and revenue slows in most units
Published: 22 November, 2011
READ MORE: Financial | Hewlett-Packard | WebOS
The decision to axe smartphone activities may not have affected Hewlett-Packard's revenues very much, but it has devastated its fourth quarter profits. Net profit fell by 91% year-on-year to almost nothing, because of a $2.1bn charge mainly associated with the closure of the webOS smartphone and tablet business. The costs hit the full year results too, with profits down 19% to $9.7bn.
Revenues for the year were up 1% to $127.2bn while for the quarter, they were down 3% to $32.1bn. And the forecast for fiscal 2012 did little to lighten the mood, with executives warning of continuing decline in revenues throughout the coming year. "The macro economy is uncertain globally, especially in Europe with consumer spending soft, and we are beginning to see a slowdown in commercial spending," said CFO Cathie Lesjak. The company showed its caution by deciding to forecast only an earnings per share figure - $0.83 to $0.86 for the current quarter, down from $1.17 in Q411; and $4 for fiscal 2012, which would be up from $3.32 in 2011 and $3.69 the year before that.
It was not just the almost farcical saga of HP's mobile activities which hit performance. Nearly all its businesses saw year-on-year declines in sales, including PCs, servers and printers, though services was up by a slim 2%. The relatively small software unit did achieve a 23% uptick.
The Pre smartphones and TouchPad tablet may be things of the past, but HP has not yet made a final decision on the future of webOS, which could be retained as an embedded cloud OS or sold to one of a list of reportedly interested parties, including Amazon and Facebook.
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