H-P Delivers On Earnings (HPQ)

Hewlett-Packard Company (NYSE: HPQ) has just released its earnings report for the quarter.  The PC and IT giant posted $0.91 EPS and $27.45 billion in revenues.  Thomson Reuters had estimates at $0.90 EPS on  $27.25 billion in revenues.

As far as the next quarter is concerned, H-P sees $1.12 EPS and 8% growth in revenues (implies roughly $29.65 billion).  Thomson Reuters estimates are $1.07 EPS and $29.8 billion in revenues.
This is not exactly a ringing endorsement of a return to growth or a rapid return to normalcy, but it is not a pan either.  CEO Mark Hurd said, “Business is stabilizing, and we are confident that HP will be an early beneficiary of an economic turnaround and will continue to outperform when conditions improve.”

Revenue grew 8% in the Americas to $12.6 billion, but fell 12% in EMEA and 4% in Asia Pacific; outside of currencies, revenue was +11% in the Americas down 2% in EMEA and flat in Asia Pacific.  International revenue was 62% of H-P’s quarter.

Services revenue increased 93% to $8.5 billion, but that is skewed from the EDS deal.  Enterprise Storage and Servers was down 23% at revenue of $3.7 billion.  Software revenue fell 22% to $847 million. Personal Systems Group unit shipments grew by 2% but PSG revenue fell by 18% to $8.4 billion (notebook revenue down 10%, while desktop fell 26%). Imaging and Printing Group fell 20% to $5.7 billion. Financial Services revenue fell 1% to $670 million.

HP generated $3.9 billion in cash flow in the quarter while inventory was down 10 days to $5.9 billion; accounts receivable was up 4 days to $14.7 billion.  H-P also spent some $999 million of cash to repurchase approximately 28 million shares and cash was listed as $13.7 billion.

Today’s earnings were somewhat clouded by reports that H-P may sell off part of its outsourcing operations to concentrate on higher margin operations under the EDS deal.

Shares closed at an unofficial closing bell level up 1.95% at $43.96 and are now indicated up almost 1% at around  $44.30 in the after-hours session.  The 52-week trading range is $25.39 to $49.20.

JON C. OGG
AUGUST 18, 2009