Hewlett-Packard has announced the termination of discussions to acquire consulting firm PricewaterhouseCoopers (PWC) along with below par fourth quarter results, sending Nasdaq into a tailspin.
HP reported net income of $922 million (45c per share) for the final quarter, compared with $760 million (36c per share) for the same period last year.
However, the earnings for the period jolted investors, coming in at 41c per share, substantially lower than the earnings per share of 51c the market had been expecting.
"We are pleased that revenue growth is accelerating, but very disappointed that we missed our EPS growth target this quarter due to the confluence of a number of issues that we now understand and are urgently addressing. I accept full responsibility for the shortfall," says Carly Fiorina, HP chairman, president and CEO.
HP also announced it was no longer in negotiation with consulting firm PWC, with Fiorina commenting that she would not subject her staff to the continued distraction of the acquisition.
"Given the current market environment, we are no longer confident that we can satisfy our value creation and employee retention objectives, and I am unwilling to subject the HP organisation to the continuing distraction of pursuing this acquisition any further.
"We remain committed to aggressively growing our consulting capabilities, organically and possibly by acquisition, and are open to other business arrangements to achieve our goals," she says.
For its part, PWC merely noted that "adverse market conditions" was the reason for the termination of the $8 billion acquisition negotiations.
Collectively the news sent the HP price on a downward spiral, losing 13% of its share price on the day.
A skittish Nasdaq followed HP`s lead and the Nasdaq Composite Index hit its lowest mark in over a year, dipping below the 3 000 mark in morning trade.
The reactive exchange has made heavy weather of the year, losing 41.5% of its value since 10 March, with no end in sight.
However, the Standard and Poor`s futures index was trading up seven points this morning, suggesting a temporary respite for the battered bourse.
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