HP Struggles Continue as 3Q Earnings Fall 29%
PALO ALTO, Calif. (AP) — Hewlett-Packard Co.'s (HPQ) fiscal third-quarter earnings fell 29 percent as the personal computer and printer maker absorbed the costs of employee layoffs and past acquisitions.
The results announced Wednesday also included a slight revenue gain from the previous year, ending a streak of 11-consecutive quarters of decline as HP struggled to adapt to a shift from PCs to smartphones and tablets.
HP earned $985 million, or 52 cents per share, for the three months ended in July. That compared to income of $1.4 billion, or 71 cents per share, at the same time last year.
The company's financial performance suffered largely because of a $649 million charge to cover another round of mass layoffs and other restructuring moves being carried out by CEO Meg Whitman. The Palo Alto, California, company is in the process of eliminating another 11,000 to 16,000 jobs by October, expanding upon the 34,000 employees that it had already been jettisoning from its payroll.
The cutbacks have been spurred by a prolonged slump triggered by the growing popularity of mobile devices to connect to the Internet and perform other basic computing chores. The upheaval curbed demand for HP's desktop and laptop computers, as well as its printers.
If not for one-time charges, HP said it would have earned 89 cents per share in its latest quarter. That figure matched the average estimate among analysts surveyed by Zacks Investment Research.
HP posted revenue of $27.6 billion in the period, up from 1 percent at the same time last year and also topping the average analyst projection of $27 billion, according to Zacks. Although it was only slight, the uptick marked HP's first year-over-year gain in quarterly revenue since its fiscal third quarter in 2011 — a period that preceded Whitman's hiring as CEO.
"Overall, I'm very pleased with the progress we've made," Whitman said in a statement. "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."
For the current quarter ending in October, HP predicted its adjusted earnings will range from $1.03 to $1.07 per share. Analysts, on average, had forecast adjusted earnings of $1.05 per share, according to FactSet.
HP shares have risen 26 percent since the beginning of the year, while the Standard & Poor's 500 index has increased 7.5 percent. The stock shed 28 cents to $34.84 in Wednesday's extending trading after the third-quarter numbers came out.