joins the ranks of technology firms seeing disappointing financial results. HP today announced that it expects a revenue decline of between two and four percent, both sequentially and year-over-year for its second fiscal quarter ending April 30. The cause? “Rapid deterioration in consumer information technology (IT) spending around the world.”
The company said the results also reflect an approximately four percent adverse currency effect, as expected currency improvements didn’t materialize during the quarter. Unfortunately, one effect of all this is the laying off of 3,000 people in management positions as part of broader cost-cutting measures. Earlier this year, HP announced plans to lay off 1,700 employees in marketing jobs. HP will also tighten up on discretionary spending and require employees to take incremental days off.
The company expects earnings per share to be in the range of 13 to 17 cents for the quarter. This estimate includes approximately US$150 million of one-time inventory and capacity write-downs associated with some of the company’s consumer products.
“When we issued our previous second fiscal quarter guidance, we had limited visibility into the extent of the U.S. consumer and commercial downturn, its potential impact on other regions and the continuation of adverse currency effects,” Carly Fiorina, chairman, president and CEO of HP, said in a prepared statement. “At this time, it is quite clear that the U.S. downturn in the consumer market is now spreading to other regions, notably Europe.
Despite this, the company is seeing a slight improvement “on a global basis” in its enterprise business, she said.
“In this challenging environment, we’re staying focused on our strategy and working hard to achieve the right balance between adjusting costs and expenses downward to address current business conditions, while continuing to make the necessary investments in areas such as R&D to assure that we come out of this slowdown strong and well-positioned,” said Fiorina.
She added that in recognition of the contributions HP employees are making during these difficult times, HP won’t defer salary increases beyond the 90-day delay instituted during the first quarter.
Current planning assumptions for the third quarter call for flat revenues sequentially and year-over-year, with gross margins trending up, Fiorina said. HP’s shares are up about 95 cents to $30.20.