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HP predicts zero revenue growth in 2014

The technology giant shuffles top executives.

The world’s largest PC marker Hewlett-Packard (HP), which registered a fall of 8 per cent in net revenue for the third quarter of 2013, is not optimistic of achieving revenue growth in 2014.

For the third-quarter of 2013, the company posted net revenue of $27.2bn, in the wake of slowdown in global PC market.

Meg Whitman, CEO of HP, said: "Weak execution has amplified the market challenges we know exist. It's unlikely... that we’ll see the growth in 2014 that I had hoped."

Whitman also agreed that management errors in the enterprise group had led to a loss of 5 percentage points of market share in servers during the quarter.

Except the software division, all other HP units saw decline in revenues during the quarter. Personal systems, printing, enterprise group, enterprise services, and financial services divisions posted a fall in revenue of 11 per cent, 4 per cent, 9 per cent, and 6 per cent respectively on a year-over-year basis.

However, software division improved revenue by 1 per cent year-over-year with a 20.5 per cent operating margin.

During the quarter, the company returned to profit by earning $1.4bn, compared to a loss of $8.9bn for the same period last year.

Whitman added: "We are already seeing significant improvement in our operations, we are successfully rebuilding our balance sheet, our cost structure is more closely aligned with our revenue and we have reignited innovation at HP, with a focus on the customer."

The company’s weak performance also led to leadership changes.  On  Wednesday, Dave Donatelli was replaced by Bill Veghte to head Enterprise Group, which is HP's second-largest and most critical unit. Donatelli, considered to be a star executive, has been assigned to identify companies with initial stage technologies for acquisition.

In June, Whitman moved PC division head Todd Bradley to boost China unit. Going forward, HP will club its marketing and communications divisions under the leadership of chief communications officer Henry Gomez.

Meanwhile, HP shares fell by about 6 per cent in after-hours trading.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.