Coming off the biggest quarterly loss in Hewlett-Packard's history, CEO Meg Whitman braced investors for even more trouble ahead as she methodically tries to fix a wide range of longstanding problems.
Those challenges will be compounded by a feeble economy that Whitman expects to weaken even more during the next year.
HP said the internal and economic turmoil will cause its earnings to fall by more than 10 per cent next year, a decline that hadn't been anticipated by analysts who follow one of the world's largest - and most dysfunctional - technology companies.
Whitman delivered the disappointing forecast Wednesday at a meeting that the ailing Silicon Valley pioneer held for analysts and investors. The gathering gave Whitman the opportunity to persuade Wall Street that she has come up with a compelling strategy for turning around HP one year after being named CEO.
Investors evidently didn't like what they heard. HP's stock plunged 13 per cent after Whitman's presentation, shoving the company's shares to their lowest level in nearly a decade.
HP's troubles stem from a combination of managerial malaise, high-priced acquisitions that haven't paid off and an inability to offset the damage done to its personal computer and printer divisions by the rising popularity of smartphones and tablet computers.
Whitman maintained that she inherited a bloated, poorly managed company that hasn't been innovating quickly enough in any of its divisions, which span from PCs and printers to software and data storage.
In a recurring theme during her tenure, Whitman said that she will instil the discipline, focus and accountability needed to rehabilitate HP, but she reiterated that the recovery will take several years to complete.
It could be 2015 before Hewlett-Packard's revenue growth begins to accelerate again, according to Whitman. By 2016, she envisions HP's revenue increasing as the same pace as the U.S. economy's overall growth, with earnings rising at a faster clip.
Investors are worried HP's woes will allow its competitors - Apple, IBM and Oracle - to race further ahead. HP is constantly scrambling to catch up with new technology trends, leaving it in a state of perpetual disarray.
Whitman, who won acclaim during a successful decade-long stint running eBay Inc., is confident HP can recapture the drive and creativity that established the company as an industry leader through most of its 73-year history.
Whtman wants HP to design another smart-phone, something it did two years ago after buying Palm, only to scrap the device after a few months on the market. HP's return to the smart-phone business isn't planned for next year.
