OEM’s second-quarter profit decreases, but 2013 earnings outlook is raised.
Reuters reports that despite HP’s quarterly results for 2Q13 falling by 32 percent, the turnaround efforts by CEO Meg Whitman are beginning to take effect as its enterprise computing services offset its struggling personal computer sales, with results not being as low as anticipated.
The company’s shares gained 14 percent following reported projected full-year earnings per share of $3.50 (€2.71) to $3.60 (€2.79), raising the lower end by 10 cents. However, the company’s net income fell to $1.08 billion (€836 million), or 55 cents per share, from $1.59 billion (€1.2 billion), or 80 cents per share in the same quarter of 2012. HP also earned 87 cents per share “on an operating basis” during the quarter on revenue of $27.6 billion (€21.4 billion). The previously estimated earnings had been 81 cents per share on revenue of just over $28 billion (€21.7 billion).
As a result, it is estimated that its fiscal third quarter will see non-GAAAP earnings per share of between 84 and 87 cents – an improvement on the 83 cents previously expected by analysts on Wall Street.
In 2013 so far, HP’s shares have increased 51 percent to $24.08 (€18.64) as investor confidence grows, with Cathie Lesjak, CFO of HP, commenting: “This is another good deposit on the road to our turnaround here […] We are roughly where we want to be in total on the company.”
Whitman’s turnaround plans for the company include laying off 29,000 employees over the next two years, cutting costs and expanding into markets with longer-term potential, including enterprise computing services. The company has written off $10.8 billion (€8.36 billion), mostly due to the write-down of its EDS services business.
In terms of HP’s business divisions, it reported that revenue fell across most divisions, with the personal systems group seeing the steepest decline but recording a 3.2 percent operating margin, an increase of 0.5 percent from the previous quarter. The OEM’s printing division had the smallest revenue decline at just one percent and had a “strong operating margin” of 15.8 percent.
Hp was also able to reduce its net debt by $1.8 billion (€1.4 billion) to $2.9 billion (€2.24 billion) due to it generating a cash flow of $3.6 billion (€2.8 billion) during the quarter, with the company ending the quarter with gross cash of $13.6 billion (€10.5 billion).