Hewlett-Packard posts surprise revenue gain on strong PC sales
The big number: Hewlett-Packard said third quarter revenue grew 1% to $27.6 billion, the tech giant’s first quarterly sales gain in nearly four years. Profits fell 29% to $985 million. On a per share basis, H.P.’s profit was 52 cents compared with 71 cents a year earlier. However, the company said its adjusted profits, which exclude certain restructuring costs, was 89 cents per share. On that basis, the company’s earnings rose 3%, in line with Wall Street estimates.
What you need to know: Though CEO Meg Whitman has maintained that HP’s (HPQ) ongoing turnaround likely won’t be completed until 2016, analysts were keen to get a look at the company’s updated forecast for the remainder of the 2014 fiscal year. The company increased the low-end of its full-year outlook on Wednesday to profits of $2.75 to $2.79 per share (previously, it said it could be somewhere between $2.68 and $2.80).
Despite more or less meeting estimates, H.P.’s shares fell a modest .6% in after-hours trading on Wednesday after already dropping 1% during the day. Whitman said in a statement that she is “very pleased” with the company’s progress. “When I look at the way the business is performing, the pipeline of innovation and the daily feedback that I receive from our customers and partners, my confidence in the turnaround grows stronger.”
What you might have missed: Until recently, Whitman has had little to point to in her turnaround effort aside from costs savings from job cuts and lower expenses. The goal has been to offset a precipitous drop in revenue from personal computer sales. But sales numbers for the company’s computer division have started to rebound. They jumped 11.8%, to $8.6 billion in the latest quarter, after climbing 7% in the previous quarter. Included in those numbers was a 9% increase in desktop sales in the third quarter, on top of a 6% increase the previous quarter. In contrast, HP’s desktop sales dropped 7.5% overall in 2013, following a market-wide trend of declining PC sales as consumers turn to tablets. But some analysts have predicted better-than-expected sales in that market for this year.