HP switches executives as revenue slides

Hewlett-Packard Co replaced Dave Donatelli with Bill Veghte at the helm of its second-largest business division on Wednesday, reassigning the star executive to a new role identifying potential tech acquisitions as it reported a larger-than-expected 8 percent slide in third-quarter revenue.

The world's largest personal computer maker recorded revenue of $27.2 billion in the fiscal third quarter, down from $29.7 billion a year earlier, as PC sales continued to slide amid a shift toward mobile computing, and its enterprise business grappled with tepid worldwide information technology spending.

It missed the $27.3 billion in sales that Wall Street had expected, on average.

Donatelli, a rising star that Wall Street analysts once considered a candidate for a tech CEO position, relinquishes his post as chief of the Enterprise Group, which sells server, storage and software services to large organizations. He will now focus on identifying early-stage technologies for investment, the company said.

Veghte, HP's chief operating officer, takes over immediately. Veghte joined HP in 2010 after a 20-year career at Microsoft Corp, which culminated in heading the business side of the Windows unit. He also worked on developing and marketing Microsoft's server software.

CEO Meg Whitman, who took the reins at HP in September 2011, is trying to revive a Silicon Valley icon that has been sideswiped by the rapid decline of global PC sales.

Donatelli is the latest executive with a strategic role to have been replaced. In June, HP moved PC division chief Todd Bradley into a new job aimed at improving its China business and distribution relationships around the world, a move many analysts deemed a demotion.

The Enterprise Group is HP's largest business unit after personal computers, and is a critical component of Whitman's efforts to boost margins and profitability, while trying to minimize revenue declines.

The division, which recorded a 9 percent decline in sales in the second quarter, accounts for about a quarter of the company's overall sales.

Overall net income in the quarter came to $1.39 billion or 71 cents a share, from an $8.9 billion loss a year earlier when the company swallowed a big writedown of the IT outsourcing business it inherited when it bought Electronic Data Systems for close to $14 billion in 2008.

Excluding one-time items, the company earned 86 cents a share, matching the 86 cents average forecast by analysts on Thomson Reuters I/B/E/S.

Shares in the company slid more than 2 percent to $24.87 in after hours trade, from a close of $25.38 on the New York Stock Exchange.