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 user 2009-02-19 at 3:50:15 pm Views: 37
  • #21679
    Don’t cry for Hurd, Hewlett-Packard; CEO’s pay cut 20% amid sales slowdown
    job anxiety has a sound, it just got louder in Silicon Valley today
    when its largest company reported an unexpectedly dramatic slowdown in
    sales for its fiscal 2009 first quarter. One result is that the company
    is “reducing base pay and certain benefits across the company”
    beginning this quarter, according to remarks Cathie Lesjak made on the
    company’s earnings conference call this afternoon.After the call was
    over, HP distributed more details of the pay reductions, including a 20
    percent cut in base pay for its chief executive, Mark Hurd, of 20
    percent. Based on the $1.4 million salary he was paid last year, that
    amounts to a cut of $280,000. That amounts to a rounding error compared
    with the $42 million Hurd collected in total compensation last year.

    of HP’s executive council will see their base pay cut 15 percent, with
    gradually smaller reductions made down to a 2.5 percent cut in the pay
    of non-exempt wage earners. The company is also capping its 401(k)
    match at 4 percent and ending the practice of selling shares to
    employees at a discount in its stock ownership plan .Those steps,
    however, are not expected to do the trick on their own. “We need to do
    something more about our cost structure,” Lesjak is quoted in an
    interview reported by Bloomberg News. “We’re looking at the first
    quarter results and saying let’s model that that will continue for the
    rest of the year.”One major reason for the decline in sales was a 19
    percent drop in revenue from the company’s cash cow, the imaging and
    printing group. As CEO Hurd put it in the company’s conference call,
    “when you don’t have a job you’re not printing as much, is typically
    how it works.”If you’re in the market for a printer, you might want to
    pay close attention. Lesjak, in speaking about challenges with
    inventory in the printing group said, “we need to get that inventory
    down.The company is still generating a whole lot of cash, enough so
    that it could spend another $1.2 billion buying up 34 million of its
    shares. Those shares, which lost 21.5 percent of their value in the
    last quarter, that got even cheaper in after-hours trading: down $1.94,
    or 5.7 percent, to $32.14 as of 4 p.m., according to data found on
    Yahoo Finance.

    Boise employer Hewlett-Packard cuts workers’ pay up to 5 percent
    Another group of Treasure Valley workers got socked with bad news Wednesday.
    said it will cut employee pay up to 5 percent, The New York Times
    reported.HP, which employs perhaps 3,000 people in Boise, also said it
    would curtail contributions to its retirement plan and stop a plan that
    allows HP workers to buy company stock at a discount.Top executives
    will see even steeper pay cuts. Chief executive Mark V. Hurd’s base
    salary will be cut 20 percent, while other executives’ salaries will be
    cut 10 to 15 percent.In reporting its latest quarterly earnings, HP
    said its quarterly profit dropped 13 percent, and sales ticked up just
    1 percent, as even the technology company’s cash-cow printer-ink
    business was hobbled by the recession.The world’s top seller of
    personal computers also cut its 2009 earnings guidance, but it was
    still in line with Wall Street’s expectations.HP shares fell $1.08, or
    3.2 percent, to $33 in extended trading, after closing down 26 cents
    during the regular trading session, before the Palo Alto, Calif.-based
    company reported its earnings.HP once employed about 3,400 workers in
    Boise, mostly for its imaging and printing division, at its campus off
    Chinden Boulevard, between Five Mile and Cloverdale roads. The Boise
    employees and contract employees for other companies work alongside one
    another, largely on research, development and marketing of printers,
    ink and related printing and image-making goods and services.The
    company has laid off workers worldwide over the past year, though, and
    has not said how many still work in Boise.Crippled technology spending
    slammed all but one of HP’s major business lines, including PCs and
    servers. Only HP’s services division, which bulked up with its $13.9
    billion acquisition of Electronic Data Systems, saw an increase.HP
    earned $1.85 billion, or 75 cents per share, in the three months that
    ended Jan. 31. That compares with profit of $2.13 billion, or 80 cents
    per share, a year ago. Without one-time costs, HP earned 93 cents per
    share, matching analyst estimates

    Hewlett Packard Stuns Street with 13% Profit Decline
    of Hewlett Packard (HPQ) are indicated down 3% in the pre-market after
    the tech giant reported profits fell 13% to $1.85 billion, or 75 cents
    per share, in the three months that ended Jan. 31. That compares with
    profit of $2.13 billion, or 80 cents per share, a year ago.The
    company’s sales in its personal computer division fell 19 percent to
    $8.8 billion. The printer and ink division, which is a big contributor
    to the company’s bottom line, experienced a 19% decline in revenues.
    Ink cartridges and supplies fell 7 percent as well.Looking ahead,
    management predicted EPS would come in between $3.76 and $3.88 per
    share in 2009. This was a bit below the company’s previous range.

    The Bottom Line
    have been avoiding shares of HPQ since our June coverage began, when
    shares were trading at the $47 level. HPQ currently has a dividend
    yield of 0.94%, based on last night’s closing price of $34.08. The
    stock has technical support at the $28 level. If that fails to hold, we
    could possibly test the $20-22 levels. If the shares can firm up, we
    see overhead resistance around the $39-41 price area. We would remain
    on the sidelines for now.