HP spills mixed bag of Q2 earnings results early; thousands of jobs cut

HP spills mixed bag of Q2 earnings results early; thousands of jobs cut

Summary: UPDATED x2: Autonomy unit chief Robert Youngjohns will replace George Kadifa serves as head of HP's Software department.

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Chugging along its "multi-year journey" to regrowth, Hewlett-Packard turned in its second quarter earnings statement before the closing bell.

Based on the report, which dropped mysteriously ahead of schedule this afternoon, that journey is still very much ongoing.

The tech giant reported a net income of $1.3 billion, or 66 cents per share (statement). Non-GAAP earnings were 88 cents per share on a revenue of $27.3 billion.

Those earnings were up by one percent from the same quarter last year, but the opposite can be said about the revenue results.

Furthermore, Wall Street was looking for earnings of 88 cents per share, but on a revenue of at least $27.41 billion.

In response, HP shares started to tumble slightly before the end of normal trading hours on Thursday.

Nearly all of HP's major product departments saw revenue drop on a year-over-year basis, with few exceptions. Software overall remained flat, but sub-departments like Software-as-a-Service along with Licensing both ticked up a few points.

Personal Systems also proved to be a brighter spot with revenue up by seven percent annually. Within that unit, desktops and notebooks were each up by six percent, although consumer revenue declined by two percent.

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Maintaining her stance that HP is right on schedule for the aforementioned recovery journey, CEO Meg Whitman reflected on the first half of HP's fiscal year in prepared remarks:

With each passing quarter, HP is improving its systems, structures and core go-to-market capabilities. We're gradually shaping HP into a more nimble, lower-cost, more customer- and partner-centric company that can successfully compete across a rapidly changing IT landscape.

For the current quarter, analysts expect HP to deliver earnings of 89 cents per share on a revenue of $27.09 million.

HP followed up with a non-GAAP earnings guidance range of 86 to 90 cents per share. For fiscal 2014, HP projects earnings to fall between $3.63 to $3.75.

Whitman also admitted that HP needs to move faster on these changes, going so far as to proclaim the company must become "maniacally focused."

UPDATE: It turns out the missed revenue target was only the beginning of the bad news from HP.

When the complete version of the Q2 statement was released a few minutes later, it was revealed that thousands more jobs are now on the chopping block:

In May 2012, HP adopted a multi-year restructuring plan designed to simplify business processes, accelerate innovation, lower costs and deliver better results. HP previously estimated that 34,000 positions would be eliminated in connection with the plan. As HP continues to reengineer the workforce to be more competitive and meet its objectives, the previously estimated number of eliminated positions will increase by between 11,000 to 16,000.

Further details are expected during the quarterly shareholders webcast at 2PM PT/5PM ET. Check back for further updates.

UPDATE x2: While acknowledging that some businesses are performing better than others (sometimes with unforeseen results, Whitman assured shareholders during the call that HP is now starting to see benefits of investments in "key technologies."

HP chief financial officer Cathie Lesjak later highlighted expected growth in software (especially SaaS) from products dedicated to big data and security.

Lamenting that the headcount reduction needs to occur at all, Whitman stressed "it's the natural turnaround" as HP continues to regroup, positing that it will "create more capacity to invest."

Whitman also admitted that HP needs to move faster on these changes, going so far as to proclaim the company must become "maniacally focused."

Part of that focus will presumably stem from internal leadership changes. Whitman briefly noted that Autonomy unit chief Robert Youngjohns will replace George Kadifa serves as head of HP's Software department.

As for the earlier-than-expected earnings report, Whitman apologized for the error, but she did not provide any further explanation.

In regard to the layoffs, HP executives explained that the restructuring plan (expected to slash more than 45,000 jobs when all is said and done) will affect all departments and geographies, resulting in projected savings of roughly $1 billion.

Lamenting that the headcount reduction needs to occur at all, Whitman stressed "it's the natural turnaround" as HP continues to regroup, positing that it will "create more capacity to invest."

Screenshots via HP Investor Relations

Topics: Software, Data Management, Enterprise Software, Hewlett-Packard, PCs

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23 comments
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  • No surprise. HP pc is really crap

    Bought two of them before, one had broken hard drive(twice), broken touch screen, battery in 2 years.
    Another also had hard drive & battery replaced in 3 years.
    FADS_z
    • So are the printers, but

      Did HP build the screen cheaply or did it subcontract and outsource to an entity that deserves some of the blame as well?
      HypnoToad72
  • HP is taking it's medicine now...

    these results seem to tally with a company in the middle of a turn-around, whereas IBM still seems to be in denial on the need for one....

    As to the results they seem pretty good, high points in PC's must mean marketshare gain.

    I struggle to understand how a flat revenue result only $90m below guidance would disappoint analysts. Mind you analysts spend a lot of time talking up their "insight" which is most often gained at the teat of PR of the company's they "analyze".
    paddle.
  • Guess those Chromebooks and Android tablets

    weren't selling...
    William.Farrel
    • re:

      Who'd have thunk it? Internally, they've always hated Microsoft out of sheer envy.
      Sir Name
    • No evidence of that

      "Personal Systems also proved to be a brighter spot with revenue up by seven percent annually. Within that unit, desktops and notebooks were each up by six percent, although consumer revenue declined by two percent."

      For all we know the decline part of that was in printers and expensive printer supplies.
      dilettante
  • HP is hopeless

    Their consumer stuff is crap, not that they actually make any of it - they just by it from the lowest bidding Chinese slave labor camp. For years, overpriced printing supplies provided most of their profits, now people print less (interesting story: around 1999, they had a project to create software which couldn't be uninstalled that would print out stories from your favorite news sources on the internet every morning so you could read them over coffee). Their vaunted business PCs are overpriced, underspeced refugees from a few years ago. Their management structure is a pyramid scheme. Back when I was there for a few years, the engineering staff was where fresh, high GPA CS grads went to retire. The sooner HP takes the long dirt nap, the better.
    Sir Name
    • wow, i can tell that you have moved on

      not.
      paddle.
    • HP is hopeless

      > around 1999, they had a project to create
      > software which couldn't be uninstalled
      > that would print out stories


      That sounded awfully suspicious so I checked it out. I found this. Some things you cannot make up.

      http://h30434.www3.hp.com/t5/ePrint-Print-Apps-Mobile-Printing-and-ePrintCenter/How-do-I-stop-The-Daily-Manager-from-printing-on-my-printer/td-p/925893
      none none
  • My HP computers

    perform quite well still, one is several years old with WXP and the laptop is only three or so years old with W7 and the only problem has been a couple of viruses that required reloading the OS. On the desktop I lost my MC program to a bad Java update (only thing I can balme as it happened just after). So not all HP computers are junk. No HDD failures either. No touchscreen monitors (XP didn't support it anyway)
    dhays
    • Windows XP Tablet Edition...

      Windows XP Tablet Edition...and before that,windows 200o supported Touch!!
      https://www.google.com.br/search?q=Windows+XP+Tablet+Edition&es_sm=121&source=lnms&tbm=isch&sa=X&ei=g3h-U8X_NO7NsQSDr4KoBQ&ved=0CAgQ_AUoAQ&biw=1366&bih=632&dpr=1
      BrazilMan2014gv
  • printer business is pretty much dead

    I can barely remember the time I needed to print anything. PC and laptop sales go down too. Servers and networking,,, hmm,,, unlikely to give high returns too... HP simply has no vision. When was the last time you heard of a "revolutionary product" from HP or anything really interesting?
    pupkin_z
    • ummm..

      don't want to interrupt your myopia, but if you bothered to read their results you will see that their printer business is doing very well indeed.
      paddle.
      • Really?

        Looks like a 4% loss in year on year growth from the chart I see above.
        dilettante
        • yes, really.

          Whitman's commentary was that HP Printing outperformed the market and gained share in every major printing category and region.
          paddle.
    • It could be a miscalculation on their part

      Some else on this site continuously blames MS for the reason old printers and things don't work with their new OS. I pointed out that HP has made drivers for my 10+ year old printer with every Windows release, from XP, up to Windows 8.1, so it has to be the hardware vendors.

      But that got me thinking - sure it makes me a happy customer, and I'd buy HP again as they want to take care of us, but at the same time it means as long as this printer lasts, I have no need to buy a new one from them.

      Could that have been a strategic mistake on their part? Continuing to create drivers and software for older printers?
      William.Farrel
  • they made a mistake buying web os

    they made a mistake buying web os (palm)
    they should take android devices right in the beginning.
    https://www.google.com.br/search?q=web+os&es_sm=121&source=lnms&tbm=isch&sa=X&ei=RHl-U4e6K623sATN5YCYDQ&ved=0CAgQ_AUoAQ&biw=1366&bih=632&dpr=1
    BrazilMan2014gv
  • There is such a thing as too big to EFFECTIVLY manage

    Every single government is that way...which is why government is always failing (see also, obamacare and VA), and HP appears to be one of the private sector entities that is , also.
    TrishaDishaWarEagle
    • re: There is such a thing as too big to EFFECTIVLY manage

      I agree. Obamacare is boneheaded. It was a Republican idea to begin with, mandate and all, and that alone should have sent up some red flags. We should scrap Obamacare and go promptly to single payer.
      none none