HP beats the odds on Q2 earnings despite looming layoffs

HP beats the odds on Q2 earnings despite looming layoffs

Summary: Amid worries about layoffs and where the company is headed from here, HP reported better than expected second quarter earnings on Wednesday.

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Following a dismal turnout from Dell on Tuesday, Hewlett-Packard fared far better for the second quarter of 2012.

HP reported a net income of $1.9 billion, or 80 cents a share (statement). Non-GAAP earnings were 98 cents a share on a revenue of $30.7 billion. Separately, HP announced 27,000 job cuts and said it would plow the savings back into R&D.

Wall Street was expecting HP to report second quarter earnings of 91 cents a share on revenue of $29.92 billion.

CEO Meg Whitman commented in prepared remarks:

We are making progress in our multi-year effort to make HP simpler, more efficient, and better for customers, employees, and shareholders. This quarter we exceeded our previously provided outlook and are executing against our strategy, but we still have a lot of work to do.

On a conference call with analysts, Whitman added:

Overall, I feel cautiously optimistic coming out of Q2. Our results appear to be stabilizing. While I wouldn't say we've turned the corner, we are making progress. PSG held margins steady and an uptick in the commercial business helped offset continued weakness on the consumer side.

Investors must have been bracing for bad news on Wednesday after reports circled earlier this month that HP was looking to cut as much as 8 percent of its workforce with the service unit taking the brunt of the layoffs.

Dell's poor showing for the first quarter also looked like a bad omen, but Barclays analysts suggested after Dell reported that HP might actually be doing better thanks to "channel fill, rather than true end demand."

In plainer terms, HP might be shipping more units than Dell -- but not necessarily selling them to consumers and businesses. Concordingly, most hardware revenue numbers broken down by units were down for the second fiscal quarter, with a few exceptions, such as desktops up five percent.

As Whitman noted, in an effort to reassure investors and analysts, HP has announced that it is working out a roadmap for a multi-year plan to "fuel innovation and enable investment." That looks like it includes a leadership change for recently acquired Automony, which will now be run by HP's chief strategy officer and senior vice president of software, Bill Veghte.

Nevertheless, software overall was still up in revenue by 22 percent year-over-year.

For the outlook on the third fiscal quarter, HP is predicting non-GAAP earnings between 94 to 97 cents a share. For fiscal 2012, HP is planning to deliver non-GAAP earnings to land between $4.05 and $4.10 per share.

For the third quarter, Wall Street is expecting HP to report earnings of $1.02 a share on revenue of $30.24 billion. For fiscal 2012, Wall Street is looking for earnings of $4.03 on revenue of $122.3 billion.

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Topics: Dell, Banking, Hewlett-Packard

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10 comments
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  • It's just where the desktop is going.

    Acer notebooks are impressive and pricing is much lower at BJ's or other outlets.

    Just drive thorough your town on trash day and notice how many computer hutches are discarded.

    The economy is at work here also, people and businesses are making due with XP.

    Check out this brand new 500 million dollar hospital in my area, just completed. The computers are Win XP..

    http://www.virtua.org/locations/hospitals-and-locations/virtua-voorhees.aspx
    Joe.Smetona
    • There are none

      you have used that line [i]Just drive thorough your town on trash day and notice how many computer hutches are discarded.[/i] a few times past, and to be honest, I have yet to see one. I believe you are far more enamored with that line, then you are with the truth.
      Tim Cook
  • How Lame of H.P.'s leadership

    So the over paid leaders who are destroying the company will get raises run off the others and think they are doing a wonderful job. This is why you make up management take the cuts first or get new people to direct the company rather then the hard workers. Obviously as I stated many times their leadership sucks or they would be able to change things.

    This is standard 101 Corporate Failure due to pathetic leaders. You really need to get new designers or in touch with the users and stop wasting money on stupid stuff like fancy raises and vacations, fix your disaster products like the ill fated DV9000 series Pavilions Laptops people paid 1200.00 or more for cause of poor design.

    Have better designs and new lines to fit demand of needs. How ever HP wont listen and continue it's failure to the most under-qualified CEO. Leadership gets paid a mint while the others pay for their failures. Obviously this method is the oldest non-thought method of doing things.

    Also the investors need to realize this is not going to bring them more turnaround its only a quick fix then you will do this over and over and over finally you send your manufacturing to poorer standard company's cutting corners sacrificing HP's value of being a Quality Manufacture.

    Don't know which is the worse failed Technology Companies of the Banking Industry? Oh well 10 years from now if the company isn't merged again with someone will be doing same thing as they have done and maybe another pathetic CEO and leadership team.

    Like Steve Job's told the people of Apple years ago the reason your loosing money and not doing good is because your Products Suck, Get some real Innovation going there people. Take your head out of your *** into some clean air and pay attention.

    I know one thing after having two failed DV9000's like so many thousands with over heating issues, graphic and networking failures, defective hinge design, and recalled batteries and now a falling apart CQ56 Persario i'll be very leery touching another HP Product. Producing Junk will make the bottom line much worse.

    Stop being a follower and be a trend sitter for once.
    wpreece
  • HP followed...

    ..the Microsoft airliner straight into the mountain. KABOOM!
    Tony Burzio
    • HP is a Microsoft Agent.

      People have transitioned to tablets and smart phones for their core computer operations.
      They buy Amazon Fire, Nook, iPads, Android and iPhones. They check web email, browse, shop, access Facebook, Google Maps and other popular apps that don't need a desktop anymore. In effect, the computing environment has transitioned to Linux and Apple -- The sand has shifted right under Microsofts' feet in a very short amount of time.
      Rasberry Pi is a complete ARM computer that fits on a credit card sized circuit board, only runs Linux and sells for $35. http://www.raspberrypi.org/faqs The future is going to Linux.

      The Nokia-Microsoft alliance has caused Nokia to have to sell it's New York headquarters at a tremendous loss. They lost almost 3 billion dollars in the last two quarters. Bing is losing $1 billion a quarter.

      http://www.bgr.com/2012/05/18/nokia-new-york-headquarters-sold-white-plains/
      Joe.Smetona
      • Why does Microsoft scare you to the point of fabricating lies?

        [i]The Nokia-Microsoft alliance has caused Nokia to have to sell it's New York headquarters at a tremendous loss. They lost almost 3 billion dollars in the last two quarters. Bing is losing $1 billion a quarter[/i]

        Nowhere in that article (or any) did it claim it was because of Microsoft.
        But you know that, instead opting to fabricate another lie based on your fear or Microsoft.

        Yet in another article today, three major Linux vendors are abandoning Linux applications, after assesing the flaws with the Linux model, and the code itself.

        Not good news to a lInux advocate like yourself, but the facts speak, and your stories can not change them, hard as you might try.
        :|
        Tim Cook
  • HP is toast...

    Both HP & Dell are extremely foolhardy to pin all their hopes on Windows 8. Even Microsoft doesn't want to pin the hopes of MS office on Windows 8. That should tell you something.

    http://www.tech-thoughts.net/
    sameer_singh17
    • Yes, but will it be free like the already included LibreOffice?

      Who wants to pay for MS Office when LibreOffice does the same work for free?

      LibreOffice comes with Linux Mint and Ubuntu for free.

      http://www.libreoffice.org/
      Joe.Smetona
      • Apparently everyone who needs to get work done.

        Microsoft Office is a multi-billion dollar software package many are purchasing, while Libreoffice is like the free competitor to Microsoft Works, that numbers tell us people are not all that interested in.
        :|
        Tim Cook
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    nishanth123