HP shares slump after CEO gives frosty outlook

As we reported earlier today, HP released its second quarterly financial results a day earlier and warned 2011 won’t be as buoyant as it hoped. That follows the leak of a memo from CEO Leo Apotheker yesterday, telling his top henchman to stop hiring and cut costs. The memo was only sent to 10 individuals, suggesting someone’s out to get Apotheker.

The company made a profit of $2.3 billion on revenues of $31.63 billion, up a few percentage points compared to the same quarter last year.

HP blamed the poor outlook on the Japanese earthquake and tsunami and on lower profitability in its services unit. Apotheker was brought in to replace ex-CEO Mark Hurd to boost this part of the business.

Sales of its PCs to normal people, not enterprises, were also disappointing, while Apotheker told US TV service CNBC that the company had failed to exploit opportunities in services.

The results show that revenues from sales of products into the enterprise were strong, up 6.7 percent compared to Q2 of its last financial year, but services only grew by 1.5 percent. Sales of PCs into the enterprise were up by 13 percent.

At the time we wrote this, HP’s share price (tick: HPQ) had fallen by 6.66 percent to stand at $37.19.

Apotheker is pinning HP’s hopes on cloud computing, but it’s going to face some pretty stiff competition there. He said in a conference call following the results that HP had underinvested in its services business and relied too heavily on outsourcing deals.