HP CEO expects to steady the ship in 2014, sends shares north

Wed Oct 9, 2013 7:58pm EDT
 
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By Poornima Gupta

SAN JOSE (Reuters) - Hewlett Packard Co Chief Executive Meg Whitman expects revenue to stabilize in 2014 with "pockets of growth" before the business accelerates again in 2015, sending the stock up as much as 9.5 percent on Wednesday.

Whitman's comments to analysts at an annual investor briefing eased Wall Street's concerns about her multiyear turnaround program. They helped the shares recoup some of their 20 percent loss since August, when the CEO warned that growth in 2014 would be unlikely.

HP's shares were up about 8.6 percent at $22.53 at mid-afternoon. That is still down from $25.38 in mid-August, just before Whitman delivered her warning.

"Fiscal 2014 will be a pivotal year," she told analysts gathered in San Jose. "In fiscal 2015, you can still expect to see acceleration, and in fiscal 2016, an industry-leading company."

In 2014, "we expect total revenue to stabilize and start driving new pockets of growth."

On Wednesday, the company forecast earnings per share on a non-GAAP basis of $3.55 to $3.75 for fiscal 2014 - roughly in line with Wall Street's expectation for $3.63. The revenue decline will slow from 2013's pace, it added in a statement.

More than $3 billion will be earmarked for research and development, it said.

There has also been progress generating cash flow and stabilizing some parts of HP's business such as Enterprise Services, Whitman said. The company generated a total of about $7 billion in free cash flow through the fiscal third quarter of 2013, she said.   Continued...

 
Meg Whitman, CEO of Hewlett-Packard, arrives for the first session of annual Allen and Co. conference at the Sun Valley, Idaho Resort July 10, 2013. REUTERS/Rick Wilking