HP May Still Face Tough Decisions
HP, he explained, faces an uphill financial battle for a number of reasons. These include declining printer sales, enterprises downsizing their services, execution issues and PC profits coming under pressure.
Last month, HP's printer rival Lexmark(LXK) cut its second-quarter outlook, citing a weaker-than-expected demand environment, particularly in Europe, and unfavorable changes in currency exchange rates.
Like its rival, HP is especially vulnerable to spending patterns on the other side of the Atlantic. Europe, the Middle East and Africa (EMEA) accounted for more than a third of the company's second-quarter revenue, even after declining 7% year-over-year.
"HP's high exposure to Europe remains a significant risk," explained Brian White, an analyst at Topeka Capital Markets, in a note. "We view HP's multi-year restructuring program as a step in the right direction in making the Company more competitive; however, we believe this will take time to play out."
White has a hold rating and $23.50 price target on HP.
TheStreet Ratings also reiterated its hold rating on HP on Tuesday. Despite HP's attractive valuation levels, TheStreet cited the company's deteriorating net income, disappointing return on equity and poor profit margins.
Whitman herself has acknowledged that the company's turnaround will not be achieved overnight. With HP's shares tumbling more than 21% in the last three months, though, the big question is how much longer can investors wait?
HP shares crept up 1.26% to $18.92 on Tuesday.
--Written by James Rogers in New York.
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