Hewlett-Packard sales drop ahead of split into two companies
In its first financial report since announcing plans to split its printing and computers unit from its hardware and services business, Hewlett-Packard said sales in its latest quarter fell 2% while full-year sales declined 1%. Here are some of the key points of Tuesday’s fourth-quarter earnings report.
What you need to know: Wall Street expected a weak quarter from HP, and the company delivered it with $28.4 billion in quarterly revenue, just below the forecasted $28.7 billion. The drop comes after HP announced its first quarterly sales gain in roughly four years for the third quarter, when revenue was $27.6 billion.
The company’s fourth-quarter profits fell slightly to $1.3 billion, or 71 cents per share, down from $1.4 during the same quarter last year.
For the full year, HP reported $111.5 billion in sales, down 1% from the 2013 fiscal year. Profits for year dropped 1.9%, to $5.01 billion, or $2.66 per share.
HP’s (HPQ) share price dipped about 1% in after-hours trading following the release of its earnings report. The company’s stock is up nearly 7% since the planned split was announced last month; its shares have gained more than 34% so far this year as investors have backed CEO Meg Whitman’s turnaround efforts.
The big number: With a split into two publicly-traded companies set for next year, investors had been hoping for some insight into what lies ahead. However, HP did not include “costs associated with separation,” an important expense, in its outlook for the current quarter and the 2015 fiscal year.
The company predicted earnings excluding certain costs of between 72 cents and 76 cents per share for the first quarter and full-year earnings between $3.23 and $3.43 per share for 2015.
Whitman has maintained that the ongoing turnaround for HP is unlikely to be completed until 2016, and she expressed optimism on Tuesday that the plan remained on track. “There’s still a lot left to do, but our efforts to date, combined with the separation we announced in October, sets the stage for accelerated progress in [the 2015 fiscal year] and beyond,” Whitman said in a statement.
What you might have missed: While fourth-quarter sales were down across most of HP’s segments, the computer division was among the few to post gains with sales improving by 4%. Within that segment, though, was a 2% drop in desktop sales that followed two straight quarters of gains. Combined, the computers and printing business that will soon be split off posted revenue gains of 0.2% in the fourth quarter and 2.2% for 2014 fiscal year.