Today: Hewlett-Packard (HPQ) shuffles positions in its executive ranks while continuing to post declining revenues and profits. Also: Wall Street's woes continue after Fed indicates bond-buying pullback likely.

The Lead: HP continues to deal with diminishing business by reshaping structure

Silicon Valley's second-largest technology company continued to reshape its organizational structure Wednesday, when Hewlett-Packard reported that sales and profits continued to fall amid the decline of the personal-computer industry.

FILE-In this Friday, March 9, 2012, file photo, Hewlett Packard CEO and President Meg Whitman speaks at a conference on the Stanford University campus in
FILE-In this Friday, March 9, 2012, file photo, Hewlett Packard CEO and President Meg Whitman speaks at a conference on the Stanford University campus in Palo Alto, Calif. (AP Photo/Paul Sakuma, File) (Paul Sakuma)

HP CEO Meg Whitman removed the head of the company's Enterprise division, Dave Donatelli, and replaced him with Chief Operating Officer Bill Veghte, just two months after replacing the head of HP's other main division, printing and personal computers. HP also will combine its marketing and communications departments under Chief Communications Officer Henry Gomez, with Chief Marketing Officer Marty Homlish taking on a new role, the same as Donatelli.


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Whitman's latest reshuffling arrives in the process of a massive round of layoffs, with HP laying off 29,000 employees through October as Whitman attempts to turn around a company invested heavily in the declining printing and PC industries. Wednesday's earnings report showed the dire straits in which HP finds itself, with a 14 percent year-over-year decline in sales. While profits gained a great deal from last year, from a loss of $4.49 a share to profits of 71 cents a share, that gain was a result of HP's write-off of $9.2 billion from the acquisition of EDS a year ago. After removing one-time costs such as those, HP reported a profits of 86 cents a share, down from $1 a share in the year-ago quarter; revenues fell from $29.7 billion to $27.2 billion.

The declines were felt across five of the six segments HP breaks out in its earnings reports, with the only gain a 1 percent boost in its software division; the largest decline was in personal computers, which suffered an 11 percent fall year-over-year, while the enterprise group and enterprise services both declined 9 percent.

While saying in the earnings report that "we are making progress in our turnaround," Whitman said in Wednesday's conference call that she does not expect growth in the next fiscal year, which begins for HP after the current quarter ends.

"Total company year-over-year revenue growth in fiscal 2014 is unlikely," Whitman said.

In fact, ISI Group analyst Brian Marshall said Wednesday's report signaled more of a downturn ahead.

"Numbers printed tonight don't support a turnaround but a potential acceleration to the downside," Marshall told MarketWatch.

HP stock, which had risen more than 81 percent going into Wednesday's session, dropped 1.8 percent to $25.38 in regular trading, after news of the executive changes leaked early, then fell to lower than $24 a share in after-hours action.

SV150 market report: Stocks decline after Fed minutes released, Apple target raised

Wall Street's woeful August continued Wednesday, with all three major stock indexes declining after minutes from the Federal Reserve's latest meeting signaled that the central bank was likely to begin pulling back on its bond purchases by the end of the year, though timing was a sticking point.

"It's going to be a game-day decision," Bank of America Merrill Lynch senior economist Michael Hanson told the Associated Press, indicating that the Fed is likely to begin tapering off bond purchases immediately after one of their future meetings this year.

Silicon Valley stocks outperformed the larger indexes, with the SV150 dropping 0.2 percent thanks to slight gains from the largest tech company in the region, Apple (AAPL), and improvements in the solar sector.

Apple gained 0.3 percent to $502.36 after UBS analyst Steven Milunovich raised his price target from $500 to $560 and said in his note that if the Cupertino tech giant follows activist investor Carl Icahn's advice about increasing its stock buyback, it could boost the company's per-share profits by $2 a year. Milunovich also reported that he believes Apple will seal a deal with China Mobile -- the world's largest wireless carrier -- by the end of the year, a popular sentiment lately after CEO Tim Cook and China Mobile's leader met earlier this summer; Milunovich believes that move would add 17 million iPhone sales alone. A positive move in China would be welcome for Apple, which saw a big dip in its sales in China last quarter and lost a huge chunk of its tablet market share in the country, according to IDC.

Solar stocks were helped by a growing view that a global glut of solar panels has eased, with Bloomberg News reporting that surging demand in Asia has three major manufacturers producing at full capacity. One of those manufacturers is San Jose-based SunPower (SPWRA), which gained 5.4 percent Wednesday to close at $22.43; San Mateo solar installer SolarCity, which has been suffering on Wall Street since its last earnings call, gained 0.5 percent to $34.49.

Google (GOOG) also gained after the NFL confirmed meetings with the Mountain View search giant, which many speculated could lead to a Google bid on rights to the sports powerhouse's Sunday Ticket offering, which includes all NFL games. Google moved 0.5 percent higher to $869.33 while releasing just its ninth approved app for its Google Glass wearable technology, which came from a startup Google owns.

Among Wednesday's declines was Facebook, which dropped 0.2 percent to $38.32 a day after founder and CEO Mark Zuckerberg announced a new initiative to bring down the costs of expanding the mobile Internet, which does not yet include any other Silicon Valley companies. Yahoo (YHOO) also dropped 0.2 percent, closing at $27.06, despite a ComScore report that showed its sites beating Google's in July; Buzzfeed reported after the bell that the Sunnyvale company is looking to strike a data deal with Foursquare. Juniper Networks fell 2 percent to $19.90 as it continues to search for a new CEO, eBay (EBAY) dropped 2 percent to $50.96 and Cisco (CSCO) declined 1 percent to $24.07.

Up: SunPower, Yelp, Gilead, VMware, Pandora, SolarCity, Google, Oracle (ORCL), Apple, Salesforce

Down: Juniper, eBay, HP, Intel (INTC), Tesla, Netflix (NFLX), Cisco, Symantec

The SV150 index of Silicon Valley's largest tech companies: Down 2.19, or 0.17 percent, to 1,298.51

The tech-heavy Nasdaq composite index: Down 13.8, or 0.38 percent, to 3,599.79

The blue chip Dow Jones industrial average: Down 105.44, or 0.7 percent, to 14,897.55

And the widely watched Standard & Poor's 500 index: Down 9.55, or 0.58 percent, to 1,642.8

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.