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Has The Chairman Stopped Ordering Ink? Hewlett Packard Plummets After Hours On Major Downward Guidance Revision

Tyler Durden's picture


Looking at the price of HPQ after hours, one would think that the company was a biotech which just missed its Phase 3 trial. The rapidity with which it has lost $10 billion in market cap does not leave many other options... Of course, there is always the chance that Ben Bernanke may have just said no to future purchases of green ink, although we deem it highly unlikely. The real reason for the plunge in the stock was the company's earnings, which confirm that the new paradigm of economic growth, may be just slightly problematic. While the company missed on revenue, coming in at $32.3 Bn on expectations of $32.97 Bn, it is the forecast that left many stunned: HPQ now sees Q2 adjusted EPS $1.19-1.21 vs. Exp. $1.26, and full year revenue of $130-131.5bln vs. $132-133.5bln previously, and consensus of USD 133.1bln. So now in addition to plunging margins (Cisco) we are finally starting to see headline growth... And all the sellsiders continue to hike the 2011 EPS on what again?

Full outlook from the PR:

For the second quarter of fiscal 2011, HP estimates revenue of approximately $31.4 billion to $31.6 billion, GAAP diluted EPS in the range of $0.99 to $1.01, and non-GAAP diluted EPS in the range of $1.19 to $1.21.

Second quarter fiscal 2011 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.20 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges.

HP expects full year fiscal 2011 revenue in the range $130 billion to $131.5 billion, GAAP diluted EPS in the range of $4.46 to $4.54, and non-GAAP diluted EPS in the range of $5.20 to $5.28.

Full year fiscal 2011 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.74 per share, related primarily to the amortization of purchased intangibles, restructuring charges and acquisition-related charges.


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Tue, 02/22/2011 - 18:09 | 986584 Cleanclog
Cleanclog's picture

Pretty good volume after report too.  Legit sell-off.

Tue, 02/22/2011 - 18:24 | 986634 NoBull1994
NoBull1994's picture

problem is that HPQ is a big roll-up.  lack of internal growth masked for a long time.  this is probably why hurd left.

Tue, 02/22/2011 - 18:54 | 986716 MrSteve
MrSteve's picture

Apple's Steve Jobs called it "that printer company". H&P makes more $$ in profit than Xerox makes in gross sales. H&P sells ink, DuPont makes the pigments, the real hidden gold mine in that biz.

With all that wonderful background, their miss is evidence for a large part of the ecomony not buying their stuff, which is "noteworthy"

Wed, 02/23/2011 - 13:13 | 988941 Hephasteus
Hephasteus's picture

HP supplies more enterprise hardware than dell and sun and almost as much as IBM does.

The computer industry is full of shit. No sales or very low sales and more fraud than enron, worldcom and AOL combined to the 4th power.

Tue, 02/22/2011 - 20:19 | 986936 bankrupt JPM bu...
bankrupt JPM buy silver's picture

just heard rumours that the cause for the miss was snow, hail and sleet, as they have never navigated through a winter before

Tue, 02/22/2011 - 21:32 | 987111 Cursive
Cursive's picture

@bankrupt JPM

snow, hail and sleet

Ha ha.  Forgot about that bullshit excuse.

Tue, 02/22/2011 - 18:10 | 986585 hugovanderbubble
hugovanderbubble's picture

Long Lexmark''' to benefit from Multiple QE worldwide....


Hyperinflation destroying wealth thx¡¡¡Bernanke¡

Tue, 02/22/2011 - 18:10 | 986588 Diplodicus Rex
Diplodicus Rex's picture

No,  no, no. Its a lot worse than that. Chairstain Bernanke has upgraded his PC to Windoze 7 and they haven't produced a driver for his legacy printer. He's going to need a workaround.

Tue, 02/22/2011 - 18:14 | 986599 buzzsaw99
buzzsaw99's picture

His HP laptop probably caught on fire. LMAO!

Tue, 02/22/2011 - 21:15 | 987057 Jerome Lester H...
Jerome Lester Horwitz's picture

Ha! Not if he has an HP DV6000. If he does it probably will not even fire up much less start on fire. I have one of these pieces of shit laptops. I had to take the damn thing apart to reflow the solder on the graphics chip to the motherboard. I have to use this laptop on a cooler all the time with the memery door off to keep the laptop cool enough to work without over heating which would cause the graphics chip to unseat again. I should probably sell this lemon but after going through this hassle to make it work again I think I'll hold on to it until it dies. I will NEVER buy another HP product as long as I live. This is a big problem for HP which they did not address properly. If this problem occurred after your warranty expired (like mine did) HP wanted to ding you $300.00 to install a new motherboard with the same defective chip which will eventually have the same problem. Luckily I am A+ certified so I fixed this POS myself. Google "HP DV6000 NVidia" to see how many people have had this problem. Thousands of people like me who will never buy HP again! 

Tue, 02/22/2011 - 23:09 | 987368 seek
seek's picture

Not exactly finance related, but you might want to check your serial number -- HP did a fairly broad recall on that series for both bad batteries and also motherboard failures. Also check and see if the Nvidia chip used is part of the Nvidia recall as well, time frame is about right.

Tue, 02/22/2011 - 18:10 | 986589 Bastiat
Bastiat's picture

The pig Fiorina destroyed that company.

Tue, 02/22/2011 - 18:17 | 986610 Misstrial
Misstrial's picture

Which is the main reason why Boxer was re-elected to another term.

A lot of Cali voters, including me, witnessed how Carly dismantled HP.

IIRC, Apple recently bought the former H-P campus off 280.,2817,2373497,00.asp


Tue, 02/22/2011 - 18:37 | 986672 unununium
unununium's picture

+1 Genuine HP Cartridge

Tue, 02/22/2011 - 19:07 | 986746 Bastiat
Bastiat's picture

Yep, once a great company.  In the last year my wife and I have each been solicted to join separate class actions, one for a printer, the other for laptop. Another printer I had was "booby trapped" subject to a recall and we got it replaced with a new one, a tribute more to persistence and obnoxiousness of the customer than customer service by the company.  After Googling, I found out that printer was also being talked about for a class action.  Unbelievable!  Short term dirty tricks and cut corners coming home to roost--nice vision, there, Carly.

Used to be you bought HP and it was just solid. Still true of some of their printers, I think.

Tue, 02/22/2011 - 18:19 | 986612 winks
winks's picture

The "pig" has been gone for a number of years. Try blaming "Bush".

Tue, 02/22/2011 - 18:25 | 986636 topcallingtroll
topcallingtroll's picture

That darn Bush. Is he responsible for that too?

Tue, 02/22/2011 - 21:32 | 987109 penisouraus erecti
penisouraus erecti's picture

Of course. And thank God he came along or they'd still be blaming Reagan,

Tue, 02/22/2011 - 18:57 | 986728 Bastiat
Bastiat's picture

If you don't know, don't post.

Wed, 02/23/2011 - 14:07 | 988034 RKDS
RKDS's picture

Like you didn't blame Clinton for years and won't blame Obama a decade from now.

Tue, 02/22/2011 - 19:50 | 986871 Hulk
Hulk's picture

Looks like she didn't take any of that "Lucent Magic" with her to HP...

Tue, 02/22/2011 - 18:13 | 986594 Whizbang
Whizbang's picture

Well, the chart is dramatic enough, and certainly a 10% drop in 30 minutes is impressive. But if Momar really decides to torch the oil fields, the entire market, minus oil is going to dive.

Tue, 02/22/2011 - 18:13 | 986596 Careless Whisper
Careless Whisper's picture

i thought i was dysfunctional til' i looked at HPQ management.


Tue, 02/22/2011 - 18:13 | 986597 DoChenRollingBearing
DoChenRollingBearing's picture

Look out below.

Hide in cash and PMs.

Tue, 02/22/2011 - 18:39 | 986678 InconvenientCou...
InconvenientCounterParty's picture

Which takes more balls... being on the sideline in cash or being on the sidelines in PM's?

wait for it......  I rest my case.

Tue, 02/22/2011 - 18:15 | 986602 John Law Lives
John Law Lives's picture

Sell-side analysts are whores.  I have known plenty of them, and many don't have a scoop of morals.

Tue, 02/22/2011 - 18:19 | 986617 ExpendableOne
ExpendableOne's picture

Server virtualization is the new buzzword.  Companies buy fewer but larger machines to run all those pesky windoze applications on seperate virtual machines.  It's great for the customer but not so good for the people who used to sell lots of smaller windoze servers.  Also, Cisco recently started selling servers too which adds another major player to split a shrinking market.

It does not help matters that HP has long filled their consumer products with bloatware and crapware.  People who have the money to buy new equipment are being choosier now.

Tue, 02/22/2011 - 18:28 | 986644 Sancho Ponzi
Sancho Ponzi's picture

Well said, and NAS servers are replacing dedicated servers at branch offices.

+Juniper & Synology

-HP & Cisco 

Tue, 02/22/2011 - 18:40 | 986681 InconvenientCou...
InconvenientCounterParty's picture

"Currency virtualization" is a buzzword I'm familiar with.

Tue, 02/22/2011 - 18:23 | 986632 topcallingtroll
topcallingtroll's picture

I've never understood why an ink cartridge maker deserved its multiple anyway.

Tue, 02/22/2011 - 18:45 | 986691 Agent P
Agent P's picture

Are you saying ink cartridge makers should trade at less than a 40% discount to the market? 

Tue, 02/22/2011 - 18:26 | 986638 Diplodicus Rex
Diplodicus Rex's picture

Hey, I don't know what you lot are worried about anyway...

<a href="">The Obama administration has been heavily criticised for not tackling America's deficit this year, but Mr Geithner insisted that the country has more time than the UK and its European neighbours to take the necessary steps.</a>

Looks like your nice Mr Timmay has it all in hand.

I'm not sure about the "light touch" quote though. From where I'm sitting it looked like outright fraud to me.


Ok, so how do you embed a link? Whats the correct syntax?

Tue, 02/22/2011 - 18:49 | 986695 Argonaught
Argonaught's picture

I think your syntax is fine...anchor tag rendering on the page correctly?

Tue, 02/22/2011 - 18:54 | 986717 Diplodicus Rex
Diplodicus Rex's picture

"anchor tag rendering on the page correctly"

Apologies but how would one go about checking that particular issue? TIA

Tue, 02/22/2011 - 19:19 | 986785 Diplodicus Rex
Diplodicus Rex's picture

Aha, its not rendering the less than (<) sign or more than (>) sign correctly. US vs UK keyboard?

Tue, 02/22/2011 - 18:37 | 986664 AN0NYM0US
AN0NYM0US's picture

I hate HP - I hate their printers, I hate the rip off prices for their ink, I hate their crappy computers, I hate their intrusive effing software that screws up my computers and I dislike how they as a leader in facilitating outsourcing, have moved back offices from little towns across North America to low wage locations in Mumbai, Eastern Europe etc





Tue, 02/22/2011 - 18:36 | 986667 pragmatic hobo
pragmatic hobo's picture

more than likely the Chairman is ordering remanufactured ink cartridges as even he can't affor the price of color ink.

Tue, 02/22/2011 - 18:37 | 986673 AN0NYM0US
AN0NYM0US's picture

no ink required by the chairman he has gone virutal

Tue, 02/22/2011 - 18:36 | 986669 TooBearish
TooBearish's picture

And all the sellsiders continue to hike the 2011 EPS on what again?

I know!!! I know!!!...Margin compression and expanded multiples because of QE VIII !!!

Tue, 02/22/2011 - 18:48 | 986699 Rainman
Rainman's picture

....and don't forget the deliriously happy consumer anxious to spend more for less gas. 

Tue, 02/22/2011 - 18:52 | 986712 mule65
mule65's picture

Hmm, this may put a damper on the BTFD crowd.

Tue, 02/22/2011 - 18:59 | 986730 ebworthen
ebworthen's picture


If municipalities and states don't have money for employees they aren't exactly going to be buying a lot of new printers, computers, and network appliances.


Tue, 02/22/2011 - 18:59 | 986731 John McCloy
John McCloy's picture

Apple is destroying them no surprises there. The HP laptop I bought lasted me 4 months..complete misassembled low quality virus magnet.

Tue, 02/22/2011 - 21:28 | 987099 penisouraus erecti
penisouraus erecti's picture

Funny, as I walk through our data center.....I see no Apple products, but HP servers and SAN's out the wazoo...........

Wed, 02/23/2011 - 00:21 | 987563 ebworthen
ebworthen's picture

I hate to tell you, but Apple is taking over the University I work for...

Tue, 02/22/2011 - 19:07 | 986747 Milton Waddams
Milton Waddams's picture

Excuse me but The Ministry Of Perpetual Prosperity would like to remind you that demand for ink remains strong!

Between the Fort Worth, Texas and the Washington, DC Facilities approximately 9 tons of ink per day were used during FY 2010.

Tue, 02/22/2011 - 19:14 | 986767 GolfHatesMe
Tue, 02/22/2011 - 19:24 | 986804 strannick
strannick's picture

He creates it by fiat!

Tue, 02/22/2011 - 19:16 | 986771 SilverRhino
SilverRhino's picture

Let's do amazing .... dropoffs Bitchez!

Tue, 02/22/2011 - 19:23 | 986801 strannick
strannick's picture

'Has the Chairman stopped ordering ink?'

Pure -earmuffs-



Tue, 02/22/2011 - 19:43 | 986860 10kby2k
10kby2k's picture

BTF h-p D

Tue, 02/22/2011 - 19:56 | 986883 TriggerFinger
TriggerFinger's picture

hee haw, humorous headline

Tue, 02/22/2011 - 20:13 | 986924 XRAYD
XRAYD's picture

Nothing to do with Dell's better than expected results, of course!

Tue, 02/22/2011 - 20:35 | 986967 Brokenarrow
Brokenarrow's picture

Why is there no "QE, PPT, Melt up, TBTF, BEN, balh,blah" talk today?

Respectfully, if the market was up 50 today there would be a piece written about "the pomo pump is on"

You get my point?

Tue, 02/22/2011 - 21:19 | 987028 b_thunder
b_thunder's picture

so it erased 2011 gains.  big eff-ing deal.... every stock regardless of "earnings" will retrace that move soon.   @42 HPQ is still 10% higher than 52-week low.


Tue, 02/22/2011 - 21:33 | 987116 Cursive
Cursive's picture

@ b_thunder

Be a hero.  BTFD.

Tue, 02/22/2011 - 22:40 | 987281 biggbear77
biggbear77's picture

the stock is plummetting, but the revision is hardly major...a couple of percent revenue and earnings for fy2011...for a stock at 10x's profits and 6x's ebitda including stock comp there no value that ZH ever recognizes?  look, the co has issues as do most...but cheap is cheap, even if they do stupid, overpriced deals....not long ago all private rmbs were utterly worthless on this site due to the robosigning mess...i bought a bunch a few months ago at a 15% yield...per month... have half my capital back and they are marked up to 2.1...some things get too cheap not to own...

Tue, 02/22/2011 - 23:43 | 987467 zebra
zebra's picture

actually, now that the money printing is all electronic, so no more buying ink and paper.

Wed, 02/23/2011 - 00:01 | 987518 mogul rider
mogul rider's picture

ink is a leading indicator.....................

Wed, 02/23/2011 - 01:18 | 987686 web bot
web bot's picture

Inflation is now starting to come on mainstream.

#uck... it's finally here.

Wed, 02/23/2011 - 03:28 | 987829 Itsalie
Itsalie's picture

Start of year, bonuses paid, stock options have been exercised and sold; time to bring down expectations and stock price to buy back more cheap shares for the next round of stock options issuance; yearly trick of the CFOs at all the tech companies. Couldn't choose a better time than today.

Wed, 02/23/2011 - 07:00 | 987941 NewThor
NewThor's picture

Wait. Hold on. WTF is this Scheezait. HP followed a Blockbuster and Borders

American brilliant business model and now that model don't fly so high

so the Unicorn Feed now costs more for HP?

Meh. HP is Harry Potter now anyway,

and $30 dollars for a dixie cup of piss sized ink cartridge 

that sounds more like BP without the Deaths. Or like sssSlytherinn


Who believes in Mythology, Sci-Phi or Art.

Money is the god of 0-2011 ish.

Good Children of the Gods fly forever and ever


Wed, 02/23/2011 - 07:01 | 987943 NewThor
NewThor's picture


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