HP sees no silver bullets for fiscal 2013

Hewlett-Packard CEO Meg Whitman made her case for the company in an analyst powwow, but the underlying message is that the IT giant has been rattled by executive turnover and it'll take time to right HP's struggling units and balance sheet.

Meanwhile, HP's outlook for fiscal 2013 will fall short. CFO Cathie Lesjak said the company expects non-GAAP earnings of $3.40 a share to $3.60 a share with revenue declines of 11 percent to 13 percent.

Wall Street was looking for fiscal 2013 earnings of $4.18 a share. HP is seeing weakness across the board.

Whitman's message had a familiar refrain to it. In fact, her chat sounded like recent earnings conference calls. Among the key points:

• HP is No. 1 or No. 2 in each of its major markets and has a trusted brand.
• The company has diversified from printing as a cash cow.
• But CEO turnover has killed HP's continuity. "The single biggest challenge at HP is the changes in CEOs," said Whitman. In other words, HP has had inconsistent plans.
• EDS, now HP services, will take time to fix.
• HP now has a more "compelling" CRM system in Salesforce.com.
• Mobility, cloud and hyperscaling are market changes HP must navigate.
• Add it up and Whitman said her first year is a rebuilding year, profits will decline in enterprise services and 2014 will show "real recovery." By 2015, HP will be humming.

The catch there is no "silver bullets." Indeed, HP's biggest issue may be that it is spread a bit thin.

Going forward, HP will focus on cloud, security and information in the enterprise. Technology services will be integrated into the enterprise unit in 2013.

Whitman also was optimistic about PCs and printers, but noted HP needs to close product gaps. Multifunction printers are an issue.

Lesjak walked through the balance sheet and realities facing the company. Lesjak said bouncing back to a mid-single A credit rating was a priority and HP needs to cut its debt position.

Bottom line: HP is retooling amid "deteriorating market conditions" with spotty execution.

Analysts going into HP's powwow weren't expecting any fixes and they were basically on target.

Barclays analyst Ben Reitzes said in a research note:

We believe HP still has structural issues that simply need time to play out. We believe the most important items to address are 1) the trajectory of free cash flow and plans for debt reduction, 2) how HP can stabilize the PC and printing businesses, 3) plans to reposition ESSN to achieve faster growth and 4) initiatives to revitalize and stabilize Services margins.

HP execs addressed some of those concerns, but the key variables here are time and patience. The company needs time to mend. Investors will need patience. Customers may need some too.

This story originally appeared at ZDNet's Between the Lines under the headline "HP braces for rough 2013, patience required."