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Hewlett-Packard Company (NYSE:HPQ) is hosting its analyst meeting in San Francisco today (October 3). The company appears focused on the multiple challenges facing the business, including organization and leadership changes, execution, secular, and cyclical shifts. The company noted that it could take 4-5 years to complete its transformation. The analyst meeting concludes at 2:00 pm PDT today, but FY2013 guidance was provided this morning. Analysts at Topeka Capital Markets Called the report a ‘bombshell.’

Analysis

The company expects FY2013 to be a “fix and rebuild” year, and this will be against a worsening macroeconomic environment. As the company moves to implement its strategic changes, it expects disruption and a broad-based profit decline in most of its businesses, particularly services. For FY2013, the company is looking for EPS of $3.40-$3.60, versus  consensus of $4.18. This is closer to the bear case scenario of $3.10 Goldman Sachs highlighted in their preview and anticipates year-over-year revenue declines across all businesses except for software. The sole source of optimism in the guidance appears to be in the printing segment, which could add pressure to the FY2013 outlook if secular challenges worsen.

(NYSE:HPQ). The Company just gave FY13 non-GAAP EPS outlook which is well below expectations and driven by their biggest concern, Enterprise Services.

Enterprise Services revenue is expected to decline 1113pct with operating margin of 03%. PC growth expected to be flat to 1% through 2015, with notebooks outpacing desktops (4% PC revenue CAGR in emerging markets through 2015, revenue CAGR for commercial tablets to be approximately 3x consumer through 2015, allinone desktop revenue CAGR of 4% through 2015). Software revenue expected to grow in FY2013. expectations. FCF is expected to be $5B versus consensus $5.8B forecast. The biggest decline in EPS is expected to come from its Enterprise Services business. The materially disappointing outlook will continue to put pressure on HPQ’s multiple (roughly 4.1x) with limited recovery near term, in analyst view, given the significant challenges (both internally and macro, which is expected to see continued weakness) and a transitional FY2013.

Topeka Capital analysts also noted,  this is the first broad-based analyst meeting for Meg Whitman as CEO oHewlett-Packard Company

Famous short-seller, Jim Chanos has called Hewlett-Packard Company (NYSE:HPQ) a value trap. On the other hand, Hewlett-Packard Company (NYSE:HPQ) is one of Seth Klarman’s largest equity holdings.

Disclosure: No position