Aug 23 (Reuters) – A host of brokerages cut their price
targets on Hewlett-Packard Co’s stock, after the No. 1
PC maker posted an $8.9 billion loss and narrowed its full-year
earnings outlook, echoing concerns raised by rival Dell Inc
about faltering demand for PCs.
HP shares, which closed at $19.20 on the New York Stock
Exchange on Wednesday, were set to open about 5 percent lower on
Thursday.
HP took a $10.8 billion charge in the quarter, mostly
related to the writedown of its EDS acquisition and said the
outlook change is on a faltering PC market and tough economic
conditions in Europe and China where growth is slowing.
HP’s PC concerns mirror those of rival Dell Inc,
which slashed its full-year earnings outlook on Tuesday saying
customers cut back on computer purchases ahead of the launch of
Microsoft’s Windows 8 software.
While RBC analysts said channel inventory drawdown ahead of
the Windows 8 launch negatively impacted sales of PCs at HP,
Baird Equity Research said consumers are spending on alternative
devices.
Notebooks are losing more and more market share to Apple
Inc’s iPads, Barclays analyst Ben Reitzes wrote in a
note.
“We think that both Dell and HP face an uphill task in the
PC market, which is affected both by weak macro and changing
consumer preference with no credible tablet product,” BMO
Capital Markets analyst Keith Bachman wrote in a note.
HP and Dell are also struggling to defend their PC market
share from Asian rivals such as Lenovo Group Ltd and
Acer Inc.
Sales from printing and imaging at HP fell 3 percent in the
third quarter.
Jefferies analyst Peter Misek said inventory correction in
the printer segment will take several quarters to resolve and it
increasingly seems smartphones and tablets are reducing overall
demand.
HP consolidated its PC and printing segment in March, which
now comprise almost 50 percent of the company, Baird said.
For price target cuts on HP shares, click
(Reporting by Chandni Doulatramani and Sruthi Ramakrishnan in
Bangalore; Editing by Joyjeet Das)
