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HP celebrates sales milestone, beats Street

Hewlett-Packard reported quarterly revenue that topped analysts' projections on Wednesday as it works through an internal restructuring plan aimed at trimming costs as it shifts its focus toward higher-margin businesses.

The company posted fiscal-third-quarter earnings per share of 89 cents, compared to 86 cents a share in the year-earlier period. Revenue for the quarter came in at $27.59 billion, versus $27.23 billion in the year-earlier period.

Revenue increased 1 percent from a year ago, marking the company's first year-over-year sales increase in three years. Sales were boosted by a 12 percent year-over-year gain in personal systems unit revenue, which has a 4 percent operating margin.

HP CEO Meg Whitman said the firm will take up more market share in the PC space in the near future.

A cyclist rides by a sign outside of the Hewlett-Packard headquarters on May 23, 2014 in Palo Alto, Calif.
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A cyclist rides by a sign outside of the Hewlett-Packard headquarters on May 23, 2014 in Palo Alto, Calif.

"Our product lineup... is the strongest we've had in years and we continue to see customers looking to refresh their aging installed base," Whitman said on the company's earnings call Wednesday. "We believe we can continue to gain share in PCs, despite the challenges in this market as it consolidates."

With a operating margin of 18.4 percent, sales in the company's printing business fell 4 percent year-over-year, while revenue generated from its enterprise services business saw a 6 percent year-over-year decline.

Initially higher, shares dropped more than 1 percent in after-hours trading.

"Yeah, the valuation's cheap and the cash flow's good, but what's going to get revenue going up?" asked Ross Gerber of Gerber Kawasaki. "And not being in the 3D printing business right now in a big way is a huge mistake for HP. This is their natural strength by far."

HP said commercial printing hardware unit sales were down 2 percent, while consumer printing hardware unit sales tumbled 6 percent.

"They really need to do something bold and big. ... They're absolutely missing the boat by not getting into 3D printing a big way," Gerber said.

Analysts had expected HP to report earnings of 89 cents a share on $27.01 billion in revenue, according to a consensus estimate from Thomson Reuters.

Looking forward, HP revised its full-year earnings guidance, bringing it in line with analysts' estimates, and said its expects to net between $3.70 and $3.74 in adjusted earnings per share. Current quarter forecast we also in line with Street projections.

In May, the company launched a massive turnaround plan and said it would cut between 11,000 and 16,000 additional jobs, in addition to 34,000 previously announced cuts.

HP's share have seen steady gains since the announcement and as of Wednesday's close, the stock was up about 27 percent year-to-date.

Last month, Ralph Whitworth resigned from his role as interim chairman due to health concerns. CEO Meg Whitman has since taken over the position.

—By CNBC's Karma Allen. Michelle Fox contributed reporting.

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