Meg Whitman’s strategy for turning around Hewlett-Packard Co. (NYSE: HPQ) failed to convince investors looking for speedier recovery and more sweeping change at a company struggling to compete in everything from personal computers to technology services. The shares dropped to a 10-year low.

Meeting with analysts a year after taking over on Wednesday, Chief Executive Officer Whitman outlined steps that include more focus on corporate customers, narrower product lines and multi- featured machines, such as printers that double as scanners and copiers. She also said the turnaround wouldn’t happen any time soon and projected 2013 profit that missed analysts’ estimates.

The full-day presentation from Whitman and her top lieutenants yesterday raised speculation that the plan may not revive a company that’s lost more than $90 billion in market value since the end of 2009. She blamed the computer maker’s challenges on management upheaval dating back to Carly Fiorina, underinvestment in new products and exposure to a PC business eroded by the shift to smartphones and tablets.

“They’re not the only company having a problem with the PC market, but when you have all these other problems and in the midst of that, the PC problem isn’t making your other problems look better,” said Ben Bajarin, an analyst at technology consulting firm Creative Strategies.

Hewlett-Packard fell 13 percent to $14.91 Wednesday in New York, the lowest close since November 2002.

PC Weakness

The company’s outlook yesterday reinforced concern that the PC industry will continue to suffer from lackluster demand. Dell Inc. dropped 4.8 percent to $9.43, the lowest close since March 2009.

Earnings excluding some costs for the 2013 fiscal year, which begins next month, will be $3.40 to $3.60 a share, Palo Alto, California-based Hewlett-Packard said yesterday. Analysts on average had estimated profit of $4.16 a share, according to data compiled by Bloomberg.

“Whitman is right — recent performance has not been good,” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan. “Her plans haven’t convinced the market that future performance will be much better.”

Whitman, the sixth CEO since 2005, including interim chiefs, was joined by Chief Financial Officer Cathie Lesjak and executives responsible for each of the company’s major business units, including enterprise services, printing, hardware, software and cloud computing.

‘Fix, Rebuild’

Next year will be a “fix and rebuild year,” Whitman said. “Innovation is actually alive and well at HP. We need to work a lot harder to get those ideas productized and commercialized and into the market much faster.”

Whitman’s argument is that chronic underinvestment in new products, a product road map that whipsawed customers through the tenures of various CEOs, and poor sales and HR planning systems have hobbled the company.

She’s projecting a smaller Hewlett-Packard — one with fewer products, fewer people and lower profits. She’s ceding much of the growth in the consumer market to Apple Inc. and won’t take on the iPad maker directly in tablets. She also said she won’t ship a smartphone in 2013.

Whitman said she won’t spin off the PC business, a prospect contemplated by her predecessor, Leo Apotheker. The company should reconsider Whitman’s decision so that it can concentrate on products designed to help customers beef up cloud-computing operations, said Brian White, an analyst at Topeka Capital Markets.

Software, Enterprise

Most of the focus now will be on reviving the printing business to generate more cash, while expanding the enterprise computing businesses, Whitman said.

“The two growth engines of our company are going to be the software business and the enterprise business,” Whitman said. “Our customers make long-term investments. This start-stop of the last three years — you can’t run the railroad that way.”
Fiscal 2014 will be a year of “recovery” and 2015 one of “acceleration,” she said.

The push to boost sales to corporate customers comes as China’s Lenovo Group Ltd. is poised to supplant Hewlett-Packard as the top PC supplier. Its share of PCs dropped to 14.9 percent in the second quarter, while Lenovo’s increased to 14.7 percent, according to Gartner Inc.

The PC market will expand less than 1 percent this year, the worst performance since it shrank in 2001, according to IDC, complicating Whitman’s turnaround effort. PCs may not grow until 2016, said Todd Bradley, head of Hewlett-Packard’s printing and PC business.

Research, Cloud

Whitman has been spending more on research and development and directing funds toward areas of the computing market where she says Hewlett-Packard can gain an edge, including managing growing volumes of business data and helping companies transition to cloud computing over the Internet.

While the research investment may pay off down the line, it’s partly responsible for the unexpected profit drop Hewlett- Packard projected for 2013, said Amit Daryanani, an analyst at RBC Capital Markets.

In the enterprise computing market, Oracle Corp. is creating a cloud service that lets companies rent processing power, storage, database software and business applications from the company instead of buying them outright, a threat to Hewlett-Packard’s server and disk drive businesses.

Microsoft Corp., International Business Machines Corp. and VMware Inc. are also vying to supply more of the platform software that can help companies switch to cloud computing.

Apple’s Lead

Bill Veghte, Hewlett-Packard’s chief operating officer, said that cloud revenue grew 39 percent to almost $4 billion in 2012 and would reach $8.4 billion by 2015.

Dave Donatelli, who leads the enterprise unit, said the company is developing data-center products such as a computer system that combines servers, storage and networking in the same chassis.

In the tablet market dominated by Apple’s iPad, Hewlett- Packard is seeking to appeal to corporate clients with an emphasis on security and the ability to run business applications. Hewlett-Packard said it will introduce a tablet for business users, the ElitePad 900, in January that runs Microsoft’s Windows 8 software.

In her drive to shore up profit hammered by sales of low- margin PCs, Whitman has announced plans to cut 29,000 jobs by the end of fiscal 2014 to save as much as $3.5 billion a year. Many of the reductions are from the company’s underperforming enterprise services unit, which former CEO Mark Hurd added with the 2008 acquisition of Electronic Data Systems. In August, Hewlett-Packard said it would write down the value of that business by $8 billion.

Revenue from enterprise services will drop as much as 13 percent in the next fiscal year, Hewlett-Packard said, citing the loss of revenue from four major accounts.