Hewlett-Packard is headed for a third straight annual sales decline amid lackluster demand for its PCs, printers and servers (Photographer-Vivek Prakash-Bloomberg)<\/figcaption><\/figure>\nChief Executive Officer Meg Whitman, still struggling to turn around Hewlett-Packard Co. (HPQ), is opting for more job cuts, a move that boosted shares the most in six months.<\/p>\n
After reporting an 11th straight quarter of declining sales, Whitman is propping up profit by paring as many as 16,000 more employees, on top of 34,000 already announced. While she has stabilized Hewlett-Packard after years of management upheaval and presided over a 39 percent share climb since taking over in 2011, the company is facing its third straight drop in annual revenue.<\/p>\n
Consumers are buying fewer personal computers and printers as they embrace smartphones and tablets, and companies are opting to use more software via the Internet or building their own machines. By shedding workers, Whitman is lowering expenses, which will free up cash for investment in new businesses and enable her to report better profit.<\/p>\n
\u201cIt clearly gives them more cushion to work on the revenue growth,\u201d said Abhey Lamba, an analyst at Mizuho Securities USA Inc., who has the equivalent of a hold rating on the stock. \u201cIt\u2019s going to be challenging to deliver that revenue growth.\u201d<\/p>\n
Profit excluding certain costs in the period ended April 30 was 88 cents a share and revenue fell 1 percent to $27.3 billion, the Palo Alto, California-based company said in a statement yesterday. Analysts had on average predicted profit of 88 cents and sales of $27.4 billion, according to data compiled by Bloomberg.<\/p>\n
Seeking Growth<\/strong><\/p>\nHewlett-Packard shares gained 5.5 percent to $33.54 at 11:46 a.m. in New York, the biggest intraday increase since Nov. 27. Through yesterday, the stock had been up 14 percent so far this year, compared with a 2.4 percent gain in the Standard & Poor\u2019s 500 Index.<\/p>\n
Net income in the fiscal second quarter rose 18 percent to $1.27 billion, or 66 cents a share, from $1.08 billion, or 55 cents, a year earlier. The company\u2019s one percent year-over-year revenue decline in the second quarter was the closest it\u2019s come to growing since 2011.<\/p>\n
The company\u2019s 1 percent revenue decline in the second quarter was the closest it\u2019s come to growing since 2011. Sales shrank 1 percent in the first three months of the year and analysts are predicting they will fall by the same amount again in the current period.<\/p>\n
\u201cWe want to become a growth company — this is the second quarter of basically flat revenue,\u201d Whitman said in an interview yesterday.\u201cWhile you may say that\u2019s not very exciting, it\u2019s way more exciting than the historical declines we\u2019ve had for the last eight quarters. The fact that we\u2019re stabilizing revenue is encouraging and positions us well for the future.\u201d<\/p>\n
Final Cuts<\/strong><\/p>\nThe job cuts announced yesterday don\u2019t reflect worsening demand for the company\u2019s products, the CEO said on a conference call. Whitman said she doesn\u2019t anticipate the need for further cuts. Hewlett-Packard had 317,500 employees at the end of October.<\/p>\n
For the third quarter, Hewlett-Packard forecast that profit, excluding amortization, restructuring charges and other costs, will be 86 cents to 90 cents a share. That compares with the average analyst estimate for 90 cents.<\/p>\n
Industrywide global PC shipments dropped in the first three months of 2014 as consumers in emerging markets opted for smartphones and tablets, while corporate demand helped slow the pace of decline. Quarterly shipments fell 4.4 percent to 73.4 million units, IDC said. Hewlett-Packard\u2019s market share rose to 16 percent, making it the No. 2 vendor after Lenovo Group Ltd., Gartner Inc. said last month.<\/p>\n
Real Gains<\/strong><\/p>\nSecond-quarter revenue in the personal-systems unit, which includes PCs, rose 7.4 percent to $8.18 billion, boosted by sales of business computers. Printing-division sales fell 4.3 percent to $5.83 billion.<\/p>\n
One of Silicon Valley\u2019s oldest companies, the manufacturer\u2019s product range spans from PCs and home printers to the servers, networking gear and software used by corporations. Hewlett-Packard has fallen behind in mobile computing at a time when consumers have migrated to smartphones and tablets made by Apple Inc. and Samsung Electronics Co.<\/p>\n
Hewlett-Packard\u2019s enterprise-computing unit, which includes servers, had sales of $6.66 billion. Within that division, revenue from servers based on Intel Corp. technology rose 0.8 percent. Storage sales were down 5.7 percent, while networking revenue climbed 6.5 percent.<\/p>\n
The enterprise-services division posted a 7 percent decline in sales to $5.7 billion.<\/p>\n
\u201cI don\u2019t know that we\u2019ve seen much that makes one feel that they can actually grow again,\u201d said Rob Cihra, an analyst at Evercore Partners Inc. He has the equivalent of a hold rating on the stock.
\nBy Ian King<\/em><\/p>\nSource: Bloomberg<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"Chief Executive Officer Meg Whitman, still struggling to turn around Hewlett-Packard Co. (HPQ), is opting for more job cuts, a move that boosted shares the most in six months. After reporting an 11th straight quarter of declining sales, Whitman is propping up profit by paring as many as 16,000 more employees, on top of 34,000 […]<\/p>\n","protected":false},"author":1,"featured_media":199,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,2,5],"tags":[],"yoast_head":"\n
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