In its quarterly earnings report yesterday, Hewlett-Packard announced that sales of personal computers fell 15 percent year over year; consumer sales fell 25 percent, and corporate PC sales fell 7 percent, all contributing to a 44-percent decline in profits. Overall revenues fell 7 percent to $30bn, which was below expectations.
On the call, both HP CEO Meg Whitman and CFO Kathie Lesjak repeatedly referenced last year's Thailand floods, which created a shortage of hard-drive disks that led to a 30-percent imbalance between supply and demand in HP's PC business and also affected its server sales - forcing the company, said Lesjak, to ship a "less richly configured product."
Lesjak said she expected the supply of hard drives to remain constrained in the second quarter, putting pressure on HP's supply chain, which, Whitman admitted, needed to get better at moving from order to delivery. While saying she believed HP was "world class" in procurement, Whitman allowed that the company needed to improve its supply-chain execution.
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