Some miracles take longer than others, and HP looks like it might be one of the long ones. After her first quarter as CEO, Meg Whitman gave her first earnings results yesterday, and it looks like HP will need a miracle to get it back to where it once was.

This is not a reflection on Meg Whitman, or her soon-to-be six month tenure as the head of HP, but rather the combination of a number of factors giving rise to the perfect economic storm that saw net profits drop by nearly a half from US$ 2.6 billion to US$ 1.5 billion on the same quarter last year.

Mixed Figures

There were also a number of other bad figures, including a drop in revenues for the three months to the end of January falling by 7% on a year earlier to $30 billion. In detail, the figures look something like this:

  • Personal Systems Group (PSG) revenue declined 15% year over year. Total units were down 18%, with a 19% decline in desktop unitsand an 18% decline in notebook units.
  • Imaging and Printing Group (IPG) revenue declined 7% year over year.
  • Consumer hardware revenue was down 15% year over year with a 15% decline in printer units.
  • Enterprise Servers, Storage and Networking (ESSN) revenue declined 10% year over year. Industry Standard Servers revenue was down 11%, Business Critical Systems revenue was down 27% and Storage revenue was down 6% year over year.

Grim reading if there were some redeeming features, particularly in areas that HP will be hoping to bank over the coming years.

  • Services revenue of US$ 8.6 billion grew 1% year over year with a 10.5% operating margin.
  • Software revenue grew 30% year over year with a 17.1% operating margin, including the results of Autonomy. Software revenue was driven by 12% license growth, 22% support growth and 108% growth in services.

Whitman’s Q1

For the first set of financial figures for a new CEO, they’re not exactly inspiring, but then everyone knew that they wouldn’t be good after 18 months of uncertainty, grim global economic prognostics and poor consumer spending.

Also notable in all the talk around the figures was the lack of any real mention of Autonomy. Aside from "...The Autonomy acquisition is going well..." we didn’t really get any indication of progress in capitalizing on its technology.

However, HP has said it is looking to build its PC business up again once it has developed a market differentiator, which, according to reports we carried earlier in the week, looks like it might be the use of IDOL for home users.

Looking through the Whitman intervention around the earnings, you might understand why the number crunchers might be a little bit nervous.

There’s a lot ofpositive affirmation about the virtues of HP and its various channels, but little detail on how to turn the company around, and one thing Wall St. loves is details, especially when they see profits plummeting by 44%.

Three Buckets for Change

As it stands, Whitman’s strategy revolves around what she describes as three buckets. Those buckets include:

Learning Opportunities

1. Execution

The first, she says, is fixing execution, which means optimizing “our supply chain” and removing complexity form the way the company designs, manufactures and deliver products, as well as upgrading sales tools and systems to respond more quickly to customers.

2. Problem resolution

This means addressing ongoing issues in each of its business areas. She says that there wasn’t enough investment right across its product portfolio to stay ahead of customer expectations and market trends.

3. Market shifts

There has been a huge shift in established profit pools and other pools are forming fast. HP needs to “… align our portfolio to deliver a new generation of capabilities…”

HP, Whitman says, needs to “define the future of technology and position HP as a leader for decades to come."

All very noble; great for feel-good sound bites, but there’s little detail on how HP is going to achieve all this.

Even with the best will in the world, the kind of change outlined in “the three buckets” is going to take time to achieve. HP has never been shy of dumping CEOs when the results haven’t been right, and Leo Apotheker probably won’t have been the last to get the chop.The question remains: How long will it take to turn HP around?