The impact of the turnaround plan at Hewlett-Packard Co. (HPQ) was realized to a degree as the world’s largest personal computer maker reported earnings for the fiscal first quarter Thursday afternoon that showed falling profits, but still topped Wall Street expectations.
For the quarter ended January 31, 2013, HP said revenue was $28.4 billion, down from $30 billion in the year prior quarter. GAAP earnings per share was 63 cents, a dime lower than the 73 cents earned in the first quarter of fiscal 2012, but far outpacing the 34 cents to 37 cents per share that the company’s prior outlook. Adjusted earnings, which exclude one-time items such as amortization, after-tax costs and more, were $1.6 billion, or 82 cents per share, compared to $1.8 billion, or 92 cents per share, in the comparable year earlier quarter.
HP’s revenue and earnings both topped analyst predictions of $27.8 billion in revenue and EPS of 71 cents.
"We beat our non-GAAP diluted EPS outlook for the quarter by $0.11 per share, driven by improved execution, improvement in our channel and go-to-market efforts and the impact of the restructuring program we announced in May 2012," said Meg Whitman, HP president and chief executive officer.
Whitman has been seated as chief executive of HP since September 2011, after former CEO Leo Apotheker was removed after less than a year on the job. During his brief tenure, Apotheker suggested spinning out the embattled PC division at HP, a move that was not well received by shareholders (or the board apparently). Whitman then stepped-in with a five-year restructuring plan. On Thursday, she quelled any mumblings during the earnings conference call about HP possibly breaking the company into pieces, saying there are “no plans” for that and that HP is “better and stronger together.”
During the first quarter, every business segment at Palo Alto, California-based HP recorded lower revenue, except the financial services arm, which grew by 1 percent to $957 million. Sales from personal computers were down 8 percent year-over-year to $8.2 billion while revenue from the printing segment slid 5 percent to $5.93 billion.
Looking ahead, HP said it expects non-GAAP EPS in the range of 80 cents to 82 cents in the fiscal second quarter, ahead of analyst expectations of 77 cents in earnings per share.
For all of fiscal 2013, HP estimates adjusted earnings per share between $3.40 and $3.60, which excludes after-tax cost of approximately $1.10 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges. Again, the outlook beat analyst predictions of $3.32 EPS for the year.
In a corporate statement, the HP chief said that she “feels good about the rest of the year,” and that the company expects benefits from the reorganization plan to “accelerate through fiscal 2013.”
Shares of HPQ closed the regular trading session Thursday at $17.10 (up 2.4% on the day) and leapt upward with the earnings report and optimistic outlook to $18.20. Even with Thursday’s late-day jump, shares are still off by about 31 percent over the past year, although they have surged more than 60 percent from 10-year lows in November.
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