PALO ALTO -- Buoyed by a big increase in its personal computer business, tech giant Hewlett-Packard on Wednesday reported third-quarter sales that exceeded what Wall Street had forecast but its profit slumped from the same period last year.
In addition, the corporation has been heavily criticized for some corporate acquisitions in recent years, including its $11 billion deal to buy British software company Autonomy in 2011. Shortly after completing that deal, HP wrote off $8.8 billion of Autonomy's value, saying it had been misled about Autonomy's worth. It also recently replaced two board members who'd been blamed for the purchase.
Autonomy's former CEO, Michael Lynch, has denied HP's claims that Autonomy's value had been artificially inflated. But those accusations are under investigation by U.S. and British authorities. In addition, the Autonomy purchase has sparked lawsuits by HP shareholders, alleging that HP didn't protect their interests when it pursued Autonomy.
Since becoming CEO in September 2011, Whitman has shuffled her executive ranks, attempted to focus the company on more profitable products and cut expenses, including laying off a good chunk of her workforce. After having nearly completed jettisoning 34,000 workers it began laying off in 2012, HP -- which has about 317,500 workers worldwide -- announced in May that it planned to cut an additional 11,000 to 16,000 employees.
The company's shares have been steadily rising for nearly a year. Nonetheless, Wall Street experts have a mixed view of its near-term prospects.
One positive is that many companies recently have been replacing their computers, in part because of Microsoft's decision to stop providing updates for its widely used Windows XP operating system. In addition, HP's market share in PCs and some computer-server niches "has also strengthened over the last three quarters," according to a recent report by Bernstein Research analysts. However, they added, "we worry that many of HP's end-markets are unlikely to see material revenue growth going forward."
In a separate note to their clients, Raymond James analysts concluded that "PC growth has peaked, as evidenced by commentary from several large resellers and distributors," and they called HP's ability to grow "questionable."