H-P shares sink to one-month low as sales drop

SAN FRANCISCO (MarketWatch) � Shares of Hewlett-Packard Co. sank Thursday, sending them to a one-month low, after drops in personal-computer, printer and server sales knocked revenue in its most recent quarter.

H-P HPQ stock fell as much as 7.2% and closed down 6.5% at $27.05. The retreat follows a roughly 13% run-up since mid-January and sends the shares closing at their worst level since Jan. 18. It was also the stock�s worst one-day drop since August.

/quotes/zigman/229301/quotes/nls/hpq HPQ 18.57, +0.56, +3.08% Hewlett-Packard shares

But the technology powerhouse�s upbeat long-term view was endorsed Thursday by some analysts, including one who painted H-P as the tortoise who came from behind to beat the hare in the well-known fable.

�Considering the enormous value destruction over the past two years at H-P, its recuperation will take time (hence the Aesop reference), but we believe H-P is off to decent start under new leadership,� according to ISI Group analyst Brian Marshall.

He was referring to new Chief Executive Meg Whitman, who took over in September after the short but tumultuous reign of Leo Apotheker. (Apotheker replaced Mark Hurd, who left abruptly amid charges of improper behavior, including a sexual-harassment complaint.) Beyond the seemingly chaotic leadership changes, H-P has reeled from stiffer competition in a fast-changing market for information technology.

On Wednesday, Whitman, the former chief of eBay Inc., told analysts: �We are building H-P to last,� even as she acknowledged the many challenges ahead.

Those hurdles were evident in late Wednesday�s report, which showed H-P�s key businesses � PCs, printers and servers � posting lower sales. As expected, a major headache was the hard disk-drive shortage, which H-P said accounted for half of the revenue decline.

The Palo Alto, Calif.-based company reported a fiscal first-quarter profit of $1.47 billion, or 73 cents a share. Adjusted profit was 92 cents, above views of 87 cents a share.

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But sales fell short. Revenue slid 7% to $30.04 billion versus expectations of $30.7 billion. Read more on H-P�s earnings.

H-P�s outlook also came in below consensus Wall Street projections.

Again, Whitman and her team stressed that fixing the mess at H-P will take time. �We are not managing for short-term objectives,� she said. �We are taking advantage of this opportunity to position H-P for success, not for the next quarter but for decades to come.�

Some analysts believe the company is on the right track, especially as H-P did beat per-share earnings expectations, despite a slight miss on revenue.

Sterne Agee�s Shaw Wu kept a buy rating, writing in a note: �We believe the key take-away is that, despite a revenue miss, H-P was still able to beat EPS by 6 cents, showing the company is making progress. � We believe the company is prudent in keeping expectations in check.�

Citigroup�s Richard Gardner also reiterated a buy rating, saying H-P posted �solid results despite multiple headwinds.�