HP Drives Guidance Higher After Charges and Enterprise Executive Changes

Hewlett-Packard Co. (NYSE: HPQ) is running higher this morning on several bits of news. There is a key personnel change in the company, accounting charges and what appears to be some raised guidance of sorts. HP may be a favorite short sale of Jim Chanos, but we just noted this week that its was officially the cheapest of the Six Cheapest DJIA Stocks.

HP has appointed Mike Nefkens, currently senior vice president and general manager of HP Enterprise Services of the EMEA region, to lead HP’s Enterprise Services group on an acting basis. John Visentin is leaving HP as the head of Enterprise Services “to pursue other interests.” HP also said that Jean-Jacques Charhon, senior vice president and chief financial officer of HP ES, was appointed chief operating officer for HP ES. As a reminder, it is the enterprise services on which HP has hinged much of its future growth.

On the guidance front, HP is raising its third-quarter fiscal non-GAAP earnings per share guidance to approximately $1.00 per share, which compared to a prior range of $0.94 to $0.97 per share. Keep in mind that this is the non-GAAP guidance. On the GAAP guidance, HP expects to record a noncash pretax goodwill impairment charge within its Services segment of about $8 billion in the third quarter. HP said that it does not expect this impairment charge to result in any future cash expenditures or otherwise affect the ongoing business or financial performance of its Services segment.

HP now expects to record a pretax charge of approximately $1.5 billion to $1.7 billion rather than $1 billion in its restructuring charges due to “a higher than anticipated acceptance rate under its early retirement program and faster than expected implementation of the workforce reduction program.”

HP shares jumped by 3% in early trading to $19.55, but shares had been up as much as 5% earlier after the news broke.

JON C. OGG