CEO Whitman 'encouraged' by performance in second quarter

HP shares rise despite fall in sales

After a series of cost-cutting exercises, HP is beginning to see its five-year plan to improve business pay off, despite falling sales.

In its latest financial statement, HP saw profit fall 32 per cent to $11bn (£731m), but shares have gone up by 12 per cent after a higher forecast for its full-year profits.

"I am encouraged by our performance in the second quarter, and I feel good about the rest of the year," said HP CEO Meg Whitman. "As I have said many times before, this is a multi-year journey. We have a long way to go, but we are on track to deliver on our fiscal 2013 non-GAAP diluted earnings per share outlook.

"After returning more than a billion dollars to shareholders through share repurchases and dividends in the quarter, we improved our operating company net debt position for the fifth successive quarter. By the end of fiscal 2013, we expect our operating company net debt to be below pre-Autonomy levels and approaching our goal of approximately zero."

Tom Reuner, principal analyst at Ovum commented: “Margin improvement and an improved guidance for the rest of the year are a sign that the restructuring measures are starting to show results. Equally an improvement in Printing and Enterprise Services is contributing to a stabilizing of HP’s performance.

“However, HP’s suggested shift to a ‘new style of of IT’ that encompasses mobile, social, Big Data and cloud is not yet central to the restructuring of HP. The focus is rather on improving operational efficiency. While the ‘new style of IT’ will help to redefine HP’s strategy in the medium to long term, the company needs to refine it communications around how it will differentiate around these industry trends.” 

The financial results come after chairman Raymond Lane stepped down from the post following a boardroom shakeup last month. 

Here’s more detail from HP direct on each of its segments:

Second Quarter Fiscal 2013 Segment Results

  • Personal Systems revenue was down 20% year over year with a 3.2% operating margin. Commercial revenue decreased 14%, and Consumer revenue declined 29%. Total units were down 21% with Desktops units down 18% and Notebooks units down 24%.
  • Printing revenue declined 1% year over year with a strong operating margin of 15.8%. Total hardware units were down 11% year over year. Commercial hardware units were down 5% year over year, and Consumer hardware units were down 13% year over year.
  • Enterprise Group revenue declined 10% year over year with a 15.9% operating margin. Networking revenue was up 1%, Industry Standard Servers revenue was down 12%, Business Critical Systems revenue was down 37%, Storage revenue was down 13% and Technology Services revenue was down 3% year over year.
  • Enterprise Services revenue declined 8% year over year with a 2.6% operating margin. Application and Business Services revenue was down 10% year over year, and IT Outsourcing revenue declined 6% year over year.
  • Software revenue was down 3% year over year with a 19.1% operating margin. Support revenue was up 12% while license revenue was down 23% and services revenue was down 5% year over year.
  • HP Financial Services revenue was down 9% year over year with a 3% decrease in net portfolio assets and a 24% decrease in financing volume. The business delivered an operating margin of 11.0%.

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