SATURDAY, AUGUST 22, 2015
B3
MARKET HP earnings outlook stumbles on weaker PC and corporate demand For the fourth quarter — the last before the separation in November — profit before certain items will be 92 cents to 98 cents a share, HP said on Thursday, below analysts’ average projection for $1
Sales fell across most divisions in the fiscal third quarter — in PCs, services, printers and software — fuelled by continued weakness in the global PC market Hewlett-Packard CEO Meg Whitman. - Bloomberg file picture
SAN FRANCISCO: HewlettPackard’s (HP) earnings outlook fell short of estimates before a breakup designed to improve growth prospects, disappointing investors looking for signs the new businesses would get a fresh start on solid ground. Sales declined across most divisions in the fiscal third quarter — in personal computers (PCs), services, printers and software — fuelled by continued weakness in the global personal-computer
market. For the fourth quarter — the last before the separation in November — profit before certain items will be 92 cents to 98 cents a share, Hewlett-Packard said Thursday, below analysts’ average projection for $1. “We faced a challenging macroeconomic and IT spending environment in the quarter,” Chief Executive Officer Meg Whitman said on a call with analysts. In the PC and printer market, which represents around half of Hewl-
SWEDISH APP-MAKER
Two businesses By creating two businesses — one offering technology and services to businesses, and another selling PCs, printers and other gadgets to consumers — Whitman is seeking to make them more responsive to market changes. That’s also making them more vulner-
able to swings in demand, as seen in today’s earnings results. PC shipments fell 9.5 per cent in the second quarter, and companies are spending less on software and services. “You’ve got this underlying current of a negative macro within an IT spending environment on PCs and printers,” said Jeffrey Fidacaro, an analyst at Monness Crespi Hardt, who has a buy rating on the stock. “They had a decent quarter given those challenges. More con-
Consumer, enterprise Shares of Hewlett-Packard fell 2.9 per cent to the equivalent of $26.95 in Frankfurt at 9:12am on Friday. The stock had declined 1.4 per cent to $27.35 at the close in New York, leaving it down 32 per cent this year. Third-quarter net income fell 13 per cent to $854 million from $985 million a year earlier, the company said. For HP, if there are declines in the PC business, only the printer business will be able to make up for it. Similarly, in Hewlett-Packard Enterprise, weak demand for corporate equipment will have to be supported by the troubled services division, instead of the more reliable PC business. “HP is going to be more of a cash flow and dividend story and HP Enterprise is going to be more of a growth story,” Fidacaro said. “When does the HP with PCs and printers become an attractive market, and how do they position HP Enterprise?” Revenue fell 8.1 per cent to $25.3 billion, compared with analyst projections for $25.4 billion, according to data compiled by Bloomberg. Sales have declined for 15 of the past 16 quarters.
Growth outlook Hewlett-Packard is due to meet with analysts next month, where it’s expected to give more financial details on the post- split companies. At that meeting they’ll update their outlook to give greater clarity on their free cash flow. Sales in three of the company’s four main divisions were down. Revenue in the company’s PC division fell 13 year over year. Printers were down 8.6 per cent on weak commercial demand. “It’s pretty challenging out there right now,” Dion Weisler, the future CEO of HP, said on the call. Services revenues fell 11 per cent. A bright spot was in the Enterprise Group, where revenues rose two per cent, driven by servers and networking. The software division, considered critical for future sales growth in the enterprise business, saw sales shrink 6.2 per cent to $900 million in the third quarter. Hewlett-Packard has been reorganizing the software business and expects it to return to growth, Whitman said. — Bloomberg News
HAVE YOUR SAY Send us your comments at facebook.com/timesofoman blog.timesofoman.com haveyoursay@timesofoman.com
A N T I T RU S T L AW S U I T
Apple Watch boosts downloads at Lifesum STOCKHOLM: Swedish health start-up Lifesum is aiming to double its user numbers by early next year as its app gains popularity in the US, helped by integration with Apple’s watch. The app, which counts calories and offers healthy recipes and motivation to those trying to get in shape, got a boost as Apple mentioned it in a presentation in October and later endorsed it as a useful feature for its watch. Lifesum seeks 20 million registered users by April, up from almost 11 million now, Chief Executive Officer Henrik Torstensson said in an interview. Lifesum is up against bigger rivals such as sporting-goods giants, which are gobbling up apps that help users shed unwanted pounds and lead a healthier lifestyle. Adidas bought workout app Runtastic GmbH, and Under Armour Inc. acquired apps Endomondo and MyFitnessPal for about $560 million. Reaching the user goal “won’t be a walk in the park,” Torstensson said at Lifesum’s headquarters overlooking a canal in Stockholm. User numbers have more than doubled in the past few months and Lifesum is projecting another growth spurt toward the end of the year, he said. One of the challenges for Lifesum and rivals is to get those who
ett-Packard’s business today, the company sees “a difficult business environment for several quarters to come,” she said.
cerns are going to be around how are these two companies going to look going forward?”
download and register to continue to use the app — and upgrade to paid-for versions. Torstensson declined to give the number of Lifesum’s active users or those who pay to access the product’s premium features. “That’s really the product challenge; how do you make it fun, accessible, motivational, easy to use and keep on using,” he said. Growth plans Lifesum’s app also works on devices such as the iPhone and Android smartphones, and it’s betting on help from the burgeoning smartwatch market as it expands beyond its strongholds of the Nordic region and Germany. The US is set to become its biggest market this fiscal year, Torstensson said. Currently, the US. is its second or third biggest region. — Bloomberg News
Microsoft files US antitrust lawsuit against InterDigital in patent fued SAN FRANCISCO: Microsoft filed a lawsuit claiming InterDigital has been violating its pledge to offer fair and reasonable licences on patents related to fundamental mobile-phone technology The antitrust lawsuit was filed Thursday in federal court in Wilmington, Delaware, a week before a US trade agency is scheduled to rule on a long-running dispute in which InterDigital is seeking royalties on Microsoft-made Nokia phones. A US trade judge in Washington said in April that Microsoft has been unwilling to licence InterDigital patents on standardised technology. In the new complaint, Microsoft argues that it’s InterDigital that’s the bad actor. Microsoft said in its complaint that it wants to stop “InterDigital’s abusive licencing practices and unlawful monopolisation” in the field of third- and fourthgeneration cellular technologies. It said InterDigital has “engaged in an unlawful scheme to acquire and exploit monopoly power over technology necessary for companies to make 3G and 4G cellular devices.” The trade case was first filed in August 2007, before Nokia sold its handset business to Microsoft. While the International Trade
NEW COMPLAINT: A US trade judge in Washington said in April that Microsoft has been unwilling to licence InterDigital patents on standardised technology. In the new complaint, Microsoft argues that it’s InterDigital that’s the bad actor. — Bloomberg file picture
Commission’s main power lies in its ability to block imports of products into the US, Wilmington-based InterDigital has said the primary goal of its litigation is to push for a licensing agreement. Microsoft, based in Redmond, Washington, is crying foul. In addition to the threatening ITC case, InterDigital is trying to force an overpriced license that covers all
of InterDigital’s patents, not just those needed to comply with the industry standard, the software maker contends. Companies that get together to create the standards for things like how Wi-Fi works pledge to license any patents on reasonable terms, to balance out their advantage in ensuring their inventions get included in the standard.
While industry standard-setting boards had previously been content to let companies duke out among themselves any royalty disputes, the issue has exploded into a policy debate that’s spread across three continents among courts, regulators and the boards themselves. Microsoft was emboldened by a July 30 appeals court ruling it won in a dispute with Motorola Mobility. There, the court ruled that Motorola, then a standalone company, breached its obligations by demanding an unfairly high royalty rate. Motorola had argued it was just the usual opening gambit to negotiations. US trade Judge Theodore Essex found in April that InterDigital had fulfilled its obligation to make a reasonable offer to license its technology but that Microsoft was unwilling to negotiate. The full commission is considering the judge’s findings and is scheduled to release its final decision on August 28. Members of the US Federal Trade Commission have taken different sides of this case, with Chairwoman Edith Ramirez, a Democrat, saying Essex was wrong in his analysis, while Republicans Maureen Ohlhausen and Joshua Wright are backing the judge. — Bloomberg News