Wall Street Watch Thursday: Hewlett-Packard Drops the Box

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hp computersNo one was expecting good news out of Hewlett-Packard's (HPQ) analyst day on Wednesday, but few imagined that the leading PC maker would dramatically slash its near-term guidance.

HP's Meg Whitman stunned investors in forecasting profitability to drop in the new fiscal year that begins next month. After earning what will likely be around $4.06 a share for the current fiscal year, HP is now expecting profitability to clock in between $3.40 a share and $3.60 a share.

Sure, there's plenty of anecdotal evidence suggesting that the company was in trouble. PC sales have been sluggish worldwide over the past few quarters, and even HP's high-margin printing business is having its problems in an age where folks simply share documents and photographs online instead of physically printing them out.

However, HP's biggest problem is that the trend is not its friend. The booming smartphone and tablet markets are eating into the traditional desktop and laptop markets. HP would love to be a relevant player in smartphones or tablets, but the market for its products has failed to materialize.

Bulls will argue that Whitman is setting the bar low enough so that HP can easily surpass these expectations. However, after hitting new nine-year lows on Wednesday -- and appearing unlikely to bounce back on Thursday -- the smarter money appears to be steering away from this struggling tech giant.

Other Things Worth Watching

• Marriott (MAR) checked in with encouraging results after Wednesday's market close. The hotel operator saw a huge pop in profitability, but the more impressive metric here is Marriott's 6% increase in REVPAR, or Revenue Per Available Room. This is the gauge that often matters most in the lodging industry, as it combines occupancy levels with the actual rates that overnight guests are paying. The 6% global increase -- and the even more encouraging 7% REVPAR uptick in North America -- prove that vacationers and business travelers really did show up this summer.

• Thursday will be a busy day in terms of economic data that will move the markets. The day kicks off with weekly jobless claims data at 8:30 a.m. ET, followed at 10 a.m. by factory orders for the month of August and Freddie Mac's weekly tally of average mortgage rates. There's never a dull moment on Wall Street.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article.


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19 Comments

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sy_link

Let's ALL be Heard: http://www.indiegogo.com/sy-link?key=a59a1b7b62483467ffaa6e48fe116bfb02065e69

October 11 2012 at 3:35 AM Report abuse rate up rate down Reply
sy_link

Let's ALL be Heard

October 11 2012 at 3:35 AM Report abuse rate up rate down Reply
johnhole

Time to fire this CEO give her $50 million severance and hire a new CEO

October 04 2012 at 11:21 PM Report abuse rate up rate down Reply
joe

Let's think about it. The last time HP was anywhere NEAR in this bad a shape they had that abortion Carly Fiorona at the Helm. Once she was booted out (quite literally) the stocks soared and the company returned to profitability.

So what does HPs board do? They hire Carly Fiorona Mk II (aka a dumber, more arrogant and inept version of the original) ..I didn't think that was possible, but Whitman single handedly just set womans rights back some 5,000 years!

For the love of God people, oust that witch NOW!!!!

October 04 2012 at 10:04 PM Report abuse +1 rate up rate down Reply
straveler222

As far as I am concerned, HP can go take a flying leap, the bought out a great company, stripped it bare and the arill cannot make it in the market place, of course I am talking about Compaq, the best computer ever made, they bougfh the name ruined it, threw them to the wind, and they are still the worst computer manufacturer in the world.

October 04 2012 at 9:05 PM Report abuse +1 rate up rate down Reply
cslinz62

My 5yr. old HP desktop does some really weird things now. The tower has already been rebuilt once. I have DSL and it is slower than dial up. I am computer illiterate so I don't know what's going on. Is my tower worn out, too many malware & spyware problems, stick a fork in it it's done? I'm ready for a tablet or smartphone.

October 04 2012 at 6:59 PM Report abuse rate up rate down Reply
Lee

HP was never a good COMPUTER company... but it used to be the BEST printer company in the business. HP support USED TO BE the best service organization in the business (before outsourcing) but now is amongst the worst. If HP went back to what it used to do well it would have a chance but, alas, very little chance of that happening.

October 04 2012 at 6:16 PM Report abuse rate up rate down Reply
Sue

I bought an HP desktop in June, tried everything and could NOT get the printer to work. Call to HP customer service in (apparently) downtown New Dehli was NO help. I was told my (not old) HP printer was "very, very old and obsolete. Need to buy a new printer." Surprise, surprise, a computer savvy friend emailed me an HP "how to" page and with one click, my printer has been working perfectly ever since. So much for HP customer service people. It would appear their job is to sell more HP products, not help with the ones you already have.

Their customer service people SHOULD be in the US and able to speak clear, understandable ENGLISH. Trying to decipher the heavy accents just adds to the stress of something already being a problem.

I completely agree about their overpriced ink cartridges. Ever have a problem with one that you obtained directly from HP and tried to get them to resolve it by simply replacing the cartridge? Not gonna happen. I purchased a 2-pack from the HP website, 1 of the cartridges leaked. They would NOT replace the leaky cartridge, even though I offered to mail it to them for their examination. I had to purchase a new 2-pack on a credit card and they subsequently refunded half of that purchase price. How does that many any sense? It took 6 months to resolve this very basic problem!!! I think they hoped I would just give up and go away.

October 04 2012 at 5:59 PM Report abuse +1 rate up rate down Reply
2 replies to Sue's comment
p60342

Yes, Sue, I oppose outsourcing, too... if a unit is sold IN the USA BY a USA company TO a USA citizen... THEN THE HELP SHOULD BE REQUIRED TO COME FROM THE USA!!!!

October 04 2012 at 6:18 PM Report abuse rate up rate down Reply
p60342

Yes, Sue, I oppose outsourcing, too... if a unit is sold IN the USA BY a USA company TO a USA citizen... THEN THE HELP SHOULD BE REQUIRED TO COME FROM THE USA!!!!

October 04 2012 at 6:18 PM Report abuse rate up rate down Reply
tmlbtb

After ripping the public off on their throw away printers and way over priced ink cartridges, I really can't feel for them.

October 04 2012 at 3:38 PM Report abuse +3 rate up rate down Reply
thomasjperez1

In the past i owned several HP products when i couldn't afford better, laptops,scanners,all-in-one's etc. HP is junk.

October 04 2012 at 3:10 PM Report abuse rate up rate down Reply