HP CEO: Companies Are Buying PCs, Consumers Aren't

There were a number of reasons behind Hewlett-Packard’s lowered forecast for the current quarter, but two above all: lousy consumer PC sales and an underachieving services business.

During a conference call Tuesday morning CEO Léo Apotheker explained why revenue at the company’s personal systems group–one of HP’s largest businesses–declined 5 percent from the same period last year.

“The PC market continues to be bifurcated,” Apotheker said. “While enterprise PC sales grew 13 percent, the consumer PC market has continued to be challenging. Even though our consumer PC expectations had been cautious, the steepness of our Q2 decline is greater than what we had anticipated.”

Equally problematic for HP was the company’s services business which isn’t performing the way the company feels it should.

“I have concluded that we had a solid strategy for Services, but we didn’t invest in the path to support the strategy,” Apotheker said. “Instead, HP focused on maximizing its shorter-term margins. We have over-executed operationally and underinvested strategically. As a result, our short-term margin expectations have been too high. This has impacted our ability to create sustainable growth for the long term.”