It was a wild courtship followed by a controversial wedding, and now the honeymoon looks more bitter than sweet. Hewlett-Packard
The report seems routine enough. The massive $3 billion in merger-related charges and the ultimate $0.14 a share in pro forma profits were expected. Sales dipping by 9% to $16.5 billion weren't far off the mark. Once again, investors ought to be awfully cautious in accepting pro forma results. There's no telling what expenses are included in those "one-time" charges.
The real problems begin when you break down the results. Hewlett-Packard's bread-and-butter imaging and printer business was up by 10%, while the personal systems and enterprise business Compaq offered up as a dowry suffered a 20% top-line slide.
Like a snake swallowing a house rat, it's a slow digestion process. This will take time. Hewlett-Packard CEO Carly Fiorina fought the unpopular decision to acquire Compaq and had little choice but to see it through, despite the slim margin of victory that isn't much of a mandate on behalf of shareholders.
Fiorina is trying to sell Wall Street on the synergy, when she's actually pitching a lemonade stand to make a lemon like Compaq work. But cost-cuttings are going as planned, and she still sees $2.5 billion in savings next year. That's a substantial sum, even if the company loses some of its sales growth to get there.
The economy is a remedial student, and it might bounce back just as Hewlett-Packard has fully absorbed the rodent in its system. That could be a case of perfect timing, as long as the company can take full advantage of the global downtime to jockey for market position. Unfortunately, the market's a lot of things, but none of them is patient.
