HP replaces enterprise chief, posts Q3 sales drop

HP's revenue fell 8 percent, with declines in all but one business unit

Hewlett-Packard reassigned Enterprise Group chief Dave Donatelli on Wednesday as it reported an 8 percent decline in revenue for its fiscal third quarter, saying all of its major divisions except software brought in less money than a year earlier.

Chief Operating Officer Bill Veghte will take over the Enterprise Group, which makes the company's x86 and Itanium servers and its enterprise networking and storage products. Donatelli will take on a new role helping to identify early-stage companies with potentially valuable new technologies, HP said in a press release.

At the same time, the company said it will reassign Chief Marketing Officer Marty Homlish and merge its marketing and communications divisions under Henry Gomez, who is already chief communications officer and will take on the CMO role.

The financial report was gloomy but not unexpected. HP has suffered from declining sales in many of its businesses over the past several quarters.

Despite the lower revenue, HP turned in earnings ahead of its earlier forecast for the quarter. The company earned $0.71 per share, compared with its previously disclosed outlook of $0.56 to $0.59 per share. Not counting one-time items, the company's profit was $0.86 per share, matching the forecast by analysts surveyed by Thomson Financial. HP's revenue also met analysts' expectations.

However, ongoing sales declines continued in the quarter, which ended July 31. The Personal Systems Group suffered the biggest drop, with revenue down 11 percent from a year earlier. Within that division, notebooks were the weakest product category, down 14 percent.

The Enterprise Group logged 9 percent lower revenue, led downward by Business Critical Systems (BCS), which were down 26 percent. BCS includes servers based on the Itanium processor family.

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Stephen Lawson

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