In her first earnings call as Hewlett Packard's CEO, Meg Whitman didn't announce the discontinuation of any products, nor did she reveal a multibillion dollar acquisition. She also didn't announce plans to sell or spin off any business units.
In HP's Q4 earnings report Monday, Whitman instead spoke of "getting back to essentials," "reducing the drama" and returning HP to a positive long term path. Even though HP expects revenue and profit to decline in 2012 as it makes the transition, Whitman made it clear that she intends to run HP much differently than it has been run in recent years.
"We need to get back to doing what we do really well," Whitman said, adding that HP created confusion with its decision to explore a sale or spin-off of its Personal Systems Group. "No more surprises -- we need to articulate a clear direction [for the future]."
In addition to boosting R&D investment, Whitman said HP needs to invest in IT systems and processes that allow the company to function as more of a cohesive, unified whole. To reflect the clearly defined mission Whitman intends to develop, HP is changing its guidance to focus on earnings per share at a company level.
Whitman ruled out any large, Autonomy size deals but said HP would consider acquisitions in the $500 million range that fit strategic aims, such as building HP's software portfolio.
"We cannot continue to rely on acquisitions alone," Whitman said in a Q&A with Wall Street analysts following the call. "We're building this company to be great over the next decade. We just can't continue to run this company for the short term."
HP's fiscal fourth quarter profit came in at $239 million, or 12 cents a share, a 91 percent drop from the $2.54 billion, or $1.10 a share, HP reported in last year's Q4. Revenue was $32.1 billion, down 3 percent from last year's $33.3 billion. For its fiscal 2011 year, HP's revenue was $127.2 billion, up 1 percent from last year, while profit was $7.1 billion, down 19 percent year-over-year.
The costs HP incurred in shutting down its WebOS hardware business were a drag on its Q4 results. HP took a $788 million charge connected to the shutdown, and $885 million in "impairment charges to goodwill and purchased intangible assets" from its April 2010 acquisition of Palm.
Whitman warned of several "unplanned challenges" that could impede HP's near term progress, like the shaky macroeconomic outlook, uncertain economies in Europe and supply chain issues stemming from the Thailand floods.
HP's Personal Systems Group revenue fell 2 percent year-over-year, with consumer client revenue falling 9 percent and commercial client revenue rising 5 percent. It was a similar situation in HP's Imaging and Printing Group (IPG), where revenue dropped 10 percent year-over-year. IPG commercial revenue was up 4 percent, but consumer printer hardware sales dropped 8 percent.
Meanwhile, HP's Enterprise Servers, Storage and Networking (ESSN) division revenue declined 4 percent year-over-year in Q4, with Business Critical Systems (BCS) revenue dropping 23 percent.
"BCS is a declining business -- it's a slow decline, but it's declining. We just have to manage that as best we can," Whitman said on the call.
HP is "remaining cautious" about its outlook for the coming year, HP CFO Cathie Lesjak said. For its current fiscal first quarter, HP is forecasting earnings of between 61 and 64 cents per share, excluding items. For its fiscal 2012, HP is forecasting earnings of at least $4 per share, excluding items.
HP shares fell 2 percent to $26.25 in Monday after hours trading.