PALO ALTO (dpa-AFX) - Computer and printer maker Hewlett-Packard Co. (HPQ) said Thursday after the markets closed that its first quarter profit fell 16% from last year, hurt by lower revenue and weaker margins.
However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.
At the same time, the company forecast second quarter adjusted earnings above analysts' current consensus estimate and reaffirmed its adjusted earnings forecast for the full year fiscal 2013.
'We beat our non-GAAP diluted EPS outlook for the quarter by $0.11 per share, driven by improved execution, improvement in our channel and go-to-market efforts and the impact of the restructuring program we announced in May 2012,' said Meg Whitman, HP president and chief executive officer. 'While there's still a lot of work to do to generate the kind of growth we want to see, our turnaround is starting to gain traction as a result of the actions we took in 2012 to lay the foundation for HP's future.'
HP shares are currently gaining 6.43% in after hours trading after closing the day's regular trading session at $17.10, up 40 cents or 2.40%. the shares trade in a 52-week range of $11.35 to $27.87.
Five of HP's reported segments recorded lower revenue for the quarter.
First quarter revenue for HP's Personal Systems Group fell 8% to $8.2 billion. For the quarter, Notebook unit sales fell 14%, but Desktop unit sales were up 10%. In August 2012, HP announced strategic alternatives for this business, but later decided to keep it following a review.
Last month, industry research firm International Data Corp. said global PC shipments in the fourth quarter of 2012 fell 6.4% from last year, as the popularity of latest smartphones and media tablets continued to hit PC demand. This marked the first time in more than five years that the PC market has seen a year-on-year decline during the holiday season, leading to annual decline also.
HP continues to be the world's largest PC maker. It had taken the world PC lead from Dell Inc. (DELL) in 2006.
First quarter Printing revenue declined 5% from a year earlier to $5.9 billion. Revenue for the company's Enterprise Group slipped 4% to $7.0 billion in the first quarter. Enterprise Services revenue for the quarter declined 7% to $5.9 billion. HP's software revenue for the first quarter fell 2% year-over-year to $926 million.
Meg Whitman, who was appointed as HP CEO in September 2011, has been making sweeping organizational changes for the past nearly one year in a bid to make HP a leaner and meaner company. In May 2012, HP said that it expected to eliminate about 27,000 employees, or 8% of its workforce as of October 31, 2011, by the end of fiscal year 2014 as part of a restructuring that is expected to generate annualized savings of $3.0 billion to $3.5 billion, majority of which will be reinvested back into the company.
For the first quarter ended January 31, 2013, the Palo, Alto, California-based company reported net income of $1.2 billion or $0.63 per share, compared to $1.5 billion or $0.73 per share for the year-ago quarter.
Excluding items, adjusted net income for the first quarter was $1.6 billion or $0.82 per share, compared to $1.8 billion or $0.92 per share in the prior year quarter.
On average, 29 analysts polled by Thomson Reuters expected the company to earn $0.71 per share for the first quarter. Analysts' estimates typically exclude special items.
Operating margin for the quarter narrowed to 6.2% from 6.8% a year ago, while adjusted operating margin shrank to $7.9% from 8.6 % last year.
Revenue for the first quarter fell 6% to $28.36 billion from $30.04 billion in the same quarter last year. Twenty-six analysts had a consensus revenue estimate of $27.79 billion for the first quarter.
Looking forward to the second quarter, HP forecast earnings of $0.38 to $0.40 per share and adjusted earnings of $0.80 to $0.82 per share.
For the full year fiscal 2013, the company raised its reported earnings forecast to a range of $2.30 to $2.50 per share from its prior guidance of $2.10 to $2.30 per share. However, the company continues to expect full year fiscal 2013 adjusted earnings in the range of $3.40 to $3.60 per share.
Analysts currently expect the company to earn $0.77 per share for the second quarter and $3.32 per share for the fiscal year 2013.
Rival Dell Inc. (DELL), which recently agreed to be taken private in a $24.4 billion deal, on Tuesday reported fourth quarter profit that fell 31% from last year, as revenue declined amid sluggish demand for personal computers. However, the company's quarterly earnings per share, excluding items, managed to beat analysts' estimate as did its quarterly revenue. The company did not provide an outlook for the first quarter and its current fiscal year in view of the recently announced going private transaction.
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