HP's Q1 stronger than expected as PC business surprises

HP's Q1 stronger than expected as PC business surprises

Summary: The PC business didn't suck nearly as bad as feared and HP's first quarter benefited. The company saw strong enterprise demand for PCs as Windows XP systems are tossed.

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Hewlett-Packard reported better-than-expected first quarter earnings and revenue as the PC business delivered sales growth amid enterprise demand.

The company reported first quarter earnings of $1.4 billion, or 74 cents a share, on revenue of $28.2 billion, down 1 percent from a year ago. On a constant currency basis, HP's revenue was up slightly. Non-GAAP earnings for the first quarter was 90 cents a share.

Wall Street was looking for first quarter earnings of 84 cents a share on revenue of $27.2 billion.

As for the outlook, HP said that it expects to report second quarter non-GAAP earnings of 85 cents a share to 89 cents a share. Wall Street was looking for second quarter earnings of 89 cents a share. For 2014, HP projected non-GAAP earnings of $3.60 to $3.75 a share compared to Wall Street estimates of $3.67 a share.

CEO Meg Whitman said that HP's restructuring was largely complete just as rivals were "confronting new challenges." Look for HP to argue that Lenovo will have integration challenges with integrating IBM's x86 server business and note IBM's retooling.

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The biggest surprise for HP was the PC business. Personal systems revenue was up 4 percent in the second quarter with commercial sales growing 8 percent. Consumer PC sales fell 3 percent.

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HP's printing business was also strong with operating margins of 16.8 percent as revenue fell 2 percent. The enterprise unit saw revenue growth of 1 percent with industry standard server sales growing 6 percent.

Enterprise services revenue, which was supposed to be decent, was down 7 percent. Software revenue fell 4 percent.

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Topics: Hardware, Data Centers, Hewlett-Packard, PCs

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17 comments
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  • HP can now stop building $100 Android tabs and Chromebooks.

    How much did HP earn from selling Chrome books and Android tabs? Could somebody enlighten please?
    Owl:Net
    • stirring the pot

      LOL... I agree if they do not break it out, it has to be bad.. Or at least that is the "logic" people use against Microsoft so the same should apply here for Chromebooks and Android.
      schultzycom
      • Well

        Not bad, having no material impact positively or negatively.

        But if you want to answer your question seriously, i.e., you wish to prepare your analysis as to what businesses HP should abandon, I expect those non-Windows products are found under Personal and perhaps Notebooks.

        I would also point out that Microsoft is very publicly stating it wishes to transition its business and capture more profits via devices. To that end, results that aren't worth mentioning would be a problem, given all its investment and capital expended on acquisitions. (Though the big one, Nokia, hasn't finalized yet. As I recall, Nokia's phone business didn't do that well last quarter and we also hear rumors that its last smartphone will run Android.)
        DannyO_0x98
        • Thinking too hard

          You may be over thinking this. PC's are here to stay so long as people need full size ergonomic workstations, reliable, and fast. It would be torture to work on a mobile device all day long.

          The consumer side is opposite, where mobile devices are preferred for casual computing. Although power users still require full PC's.
          Sean Foley
          • Exactly

            The only people speaking of the death of the PC are ZDNet writers. We aren't losing or even considering losing any here... I'd think that PC's will be a boom here shortly as businesses migrate away from XP, and those who continue to offer PC's with Windows 7 will be in the driver's seat. The environment swing from XP to Windows 8/8.1 is too much for most to swallow (unless you use Start8).
            mbond@...
    • 2 Cents

      :-)
      P. Douglas
    • Chromebook and Chromebox

      The Chromebook and Chromebox by hp should improve PC sales. They should follow the Toshiba size cue of 13" laptop and make one with an IPS screen of that size, with Celeron processor for $299 -- would be a hit.

      Another idea is a Ubuntu laptop for $499 and a desktop in same price range with SSD for storage instead of the 5400 spin HD.

      As for tablets, everyone and their brother is making them -- the iPad and Androids both do their thing well -- unfortunately the Windows Tablets are still in search of anyone wishing to make apps -- still a small store of apps :( I think hp may keep working on transformer Win8.1 Netbook desktop / tablet hybrids - made money for ASUS.
      mytake4this
  • HP's Q1 stronger than expected as PC business surprises

    Well look at that, there is demand for PCs. Maybe ZDNet will stop publishing all those post-pc era and the PC is dead type stories.
    Loverock.Davidson
    • And are those PC's

      Wintel or Chromebook ;-)

      Seriously kudos to HP, they seem to be the only one in the PC game at the moment with some good news...
      paddle.
      • What about Lenovo?

        They were doing better than HP, last time I checked.
        ForeverCookie
  • Congratulations Meg

    Some surprising good results given the current situation, Meg Whitman this making a great work.
    luis river
  • Which Windows ?

    HP's shift to offering Win7/8 PC's and Laptops in the mainstream is why they are winning. Noone wants Win 8 no matter who they are, its indescribably horrible, S L O W and just gets in the way.
    nick@...
    • Which windows indeed?

      I think you don't use Win 8.1 on even modest hardware. I do, and it's certainly *not* slow. As for the start screen, you do realize 8.1 lets you boot straight to the desktop, right? As well as having the start button on the keyboard...
      Ardwolf
  • Hey, people actual work

    For a minute there I thought everyone in the world were tablet playing slackers, then this report comes out and says that PC are doing fine. Wow, people actually work using PC's.
    Sean Foley
  • Are those pearls on the photo real or fake?

    And why whould a rich woman show off her jewelry at a business conference?
    I can not her seriously.
    ForeverSPb
    • ???

      So - is that some kind of comment on Meg Whitman's appearance? Really?

      How often have you commented on what kind of watch, or shoes a male CEO is wearing?

      "whould" - can't spell - I can't take you seriously.
      dimonic
  • Why you don't break out numbers

    Because you don't want your competitors to know "what to build".
    BrentRBrian