Hewlett-Packard Co’s (HP) chief executive officer Meg Whitman is benefiting from a surge in PC sales. Now she needs to show she can make progress in other businesses, including software and services.
The Palo Alto, California-based company on Wednesday posted its first sales growth in 12 quarters, with revenue rising 1.3 percent to US$27.6 billion for the US’ fiscal third quarter ended July 31.
Profit excluding certain items was US$0.89 per share. Analysts on average were estimating profit of US$0.89 per share and sales of US$27 billion, according to data compiled by Bloomberg.
However, even as Hewlett-Packard’s PC business saw a 12 percent jump in revenue for the quarter, sales across the company’s other divisions — including services, printers and software — either declined or posted less than 2 percent growth.
The uneven results illustrate the challenges Whitman still faces in turning around the technology giant, even after making moves to ramp up growth by launching new products and cutting jobs.
“The company is in this longer-term shift toward services and software, and neither of those divisions grew,” Edward Jones analyst Bill Kreher said. “This isn’t necessarily consistent with the long-term plan.”
In a conference call, Whitman said Hewlett-Packard has become a stronger company because it has been forged in “the adversity of the turnaround.” She acknowledged there are some declining and flat businesses, and said there are opportunities for growth, especially in PCs where “we believe we can continue to gain share.”
Whitman has stabilized Hewlett-Packard and returned the company to profit. She has focused on reducing costs and introducing new products like water-cooled servers and 3D printers.
Net income for the quarter fell 29 percent to US$985 million, or US$0.52 per share, compared with US$1.39 billion, or US$0.71, a year earlier. The company had a US$649 million restructuring cost in the quarter.
For this quarter, Hewlett-Packard projected profit excluding some items of US$1.03 to US$1.07 per share, in line with analysts’ average estimate of US$1.05, according to data compiled by Bloomberg.
Corporate spending on PCs has also helped lift the results of other technology companies. Intel Corp last month forecast revenue that exceeded analysts’ estimates for this quarter, while Microsoft Corp said it is seeing signs of improvement in the PC market.
Worldwide PC shipments slipped less than projected in the second quarter as businesses replaced older computers, researcher International Data Corp said last month.
“Where they really stood out was on their PC side,” Monness Crespi Hardt & Co analyst Jeffrey Fidacaro said. “The PC tailwind came in in this quarter, so I think we’ve got another quarter or two in that.”
Hewlett-Packard’s personal systems group, which sells PCs, saw revenue rise to US$8.65 billion in the quarter. Whitman said PCs sold well across the board in most regions, excluding China and Russia, though demand in China was good for commercial PCs.
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