Hewlett-Packard Earnings Beat Estimates, Revenue Misses

Hewlett-Packardreported quarterly earnings thatbeat analysts' expectations but the company's revenue and outlook fell short as the company grapples with weak PC and printer sales.

Hewlett Packard
Hewlett Packard

Chief Executive Meg Whitman, a veteran Silicon Valley executive who took the top job last September after the firing of Leo Apotheker, has been trying to turn around HP's sprawling businesses.

In the conference call after the earnings report, Whitman said HP's costs are not in line with revenue.

"We are taking the necessary steps to improve execution, increase effectiveness and capitalize on emerging opportunities to reassert HP's technology leadership," Whitman said in the company statement.
Shares wavered in after-hours trading on Wednesday. (Click here for the latest after-hours quote.)

The world's largest PC maker delivered first quarter earnings excluding items of 92 cents per share, down from $1.36 per share in the year-earlier period.

Net income fell 44 percent to $1.47 billion from $2.61 billion a year ago.

Revenue fell 7.1 percent to$30 billion from $32.3 billion.

HP saw sales declines in three of its key units — PC, printers and enterprise equipment. Sales from the personal systems group, encompassing PCs, declined 15 percent while revenue from its bread-and-butter printing group fell 7 percent, hurt by weak consumer demand. Sales of enterprise servers, storage and networking equipment — usually a bright point for HP — also fell 10 percent.

Analysts had expected the company to report earnings excluding items of 87 cents per share on revenue of $30.67 billion, according to Thomson Reuters.

HP said it expects second-quarter earnings to be between 88 and 91 cents a share; analysts currently expect 95 cents a share.

PC makers have struggled to maintain market share as mobile devices such asApple's iPad gain popularity. Rival Dellreported quarterly earnings on Tuesday that missed analysts' expectations by a penny and delivered a mixed outlook.

Last year was a turbulent one for HP, marked by strategy flip-flops, executive churn and the ouster of Apotheker after less than a year in the top job.

HP said margin pressure from Thailand and pricing competition were among the issues the company faced this quarter but said they're betting the second half will see a lift from new products and accelerating new business.

Whitman said she hopes that revenue declines stop by the end of 2013 and growth starts.