The troubled maker of expensive printer ink, HP has reported its results, which show that even after its restructuring it is still in a slow death spiral.
Shares in HP dropped eight percent in after-hours trading after the company reported a nine percent decline in Enterprise Group revenue. Enterprise is the company's second-largest division and a major part of CEO Meg Whitman's cunning plan to transform HP into a provider of enterprise computing services able to take on IBM and Cisco.
The troubled company has been suffering from a morale numbing restructuring for the past two years, and is still stuck with weak IT spending.
HP recorded revenue of $27.2 billion in the fiscal third quarter, down from $29.7 billion a year earlier. That missed the $27.3 billion in sales that the cocaine nose jobs of Wall Street had expected.
According to analyst outfit TBR, HP managed to improve its profits but failed to halt revenue declines.
HP's plan has been to control expenses and reallocate savings to fund lucrative, unified product, service and solution initiatives that allow HP to grow profit.
TBR analyst Jack Narcotta said that the cunning plan by Whitman and team of misery have not so far not worked,
"HP has yet to prove it can grow its non-PC and server business to offset staunch declines in those two industries, and a hyper-competitive pricing environment that will persist through 2014 will limit HP's ability to rebound from its downward growth," Narcotta wrote.
In the second quarter of 2013, HP Personal Systems Group recorded $7.7 billion in revenue, a year-to-year revenue decline of 11 percent.
Notebook and desktop PC product lines, which are a third of HP's corporate revenue were hit hardest with PC unit shipments falling 11 percent following a steep 20.1 percent annual decline last year.
Narcotta said that HP is in slow decline even though it makes it cash from lots of different sources. But things are getting slowly worse.
Last year HP's revenues were $127 billion. In 2012, full year revenue was $120 billion.
TBR expects prolonged lukewarm consumer response to HP's Windows 8 notebook and tablet PCs and things not to improve on that front. Meanwhile HP will suffer from pricing pressure in an increasingly competitive x86 server marketplace.
Narcotta thinks this will shrink revenues to $114 billion in the current calendar year, and $109 billion in 2014.
The only way forward for HP is to continue to reduce the numbers of works HP hires. So far axing employees has been what Whitman does best, but Narcotta thinks that more people are for the chop.
"HP employs more than 300,000, providing it with ample room to cut costs. It can sustain profitability at levels previously attained with higher revenue and not lower expenses," he said.
HP's operating income which is one of the highest in the PC and server industries is vulnerable to decline as server revenues shrink due to intense price competition and aggressively-priced rivals Lenovo, Acer and Asus undercut PC unit shipments.
The company appears to be trying to re-establish momentum consumer PC markets, which are lower margin, while protecting its more lucrative enterprise customer base.
Narcotta praised the addition of Chrome OS and Android devices to its portfolio which he thinks reflects a HP's awareness of the trends that are influencing the PC industry.
But growth will be limited through the rest of the year as more low-cost, APAC-based firms obstruct HP's efforts to reclaim market share.
Demand for devices such as the Slate 7 tablet and Pavilion Chromebook will be checked by Asus' Nexus 7, Samsung Galaxy Tab devices and even Apple's iPad Mini.
HP's Chromebook is priced higher than devices from market leader Samsung.
Meanwhile weakened PC demand and increasing pricing pressure as a result of fierce competition from Lenovo continue to erode HP's market share.
"While HP boasts strong PC margins relative to its Windows peers such as Acer, Asus and Lenovo, HP's hesitation to tolerate lower profit margins will limit its ability to stem attrition of consumers and enterprise PC users to vendors offering lower-price solutions," Narcotta wrote.
Revenue of from HP's industry-standard x86 servers declined 7 per cent while its storeage servers fell by 13 percent.
Traditional tape and hard-disk based storage dropped a marked 37 percent to $500 million as enterprises continue to move away from hardware heavy legacy data centres.