Wondering what is causing the quicksand under HP stock after hours? Nothing more and nothing less than what we have been predicting, namely that on its public call had such a bullish outlook on the economy, has been warning internally of that another "tough quarter" is coming.
Hewlett-Packard Co. (HPQ) Chief Executive Officer Leo Apotheker told top executives that he’s bracing for “another tough quarter” in the period that ends in July and urged deputies to “watch every penny and minimize all hiring.”
The company’s existing headcount plans are “unaffordable given the pressures on our business,” Apotheker wrote in the May 4 memo to deputies including Todd Bradley, executive vice president of the personal systems business, and Chief Financial Officer Cathie Lesjak. The memo was obtained by Bloomberg.
Apotheker’s e-mail follows the release in February of a forecast for the second quarter, which ended in April, that missed analysts’ sales and profit estimates. Hewlett-Packard blamed the shortfall on sluggish demand for services and consumer products. The memo indicates that the company continues to come under pressure and suggests job cuts are in the offing.
“Q3 is going to be another tough quarter, one in which we will be driving hard for revenue and profit,” Apotheker wrote. “We have absolutely no room for profitless revenue or any discretionary expenditures.”
And now the deluge of real, and very much deferred profit warnings, is about to hit Wall Street like a redirected Mississippi river.