HP Results Top Estimates

(RTTNews) - Computer and printer maker Hewlett-Packard Co. (HPQ) said Thursday after the markets closed that its first quarter profit rose 16% from last year, as better cost control helped offset a slight decline in revenue.

The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue.

"HP is in a stronger position today than we've been in quite some time," said Meg Whitman , HP president and chief executive officer. "The progress we're making is reflected in growth across several parts of our portfolio, the growing strength of our balance sheet, and the strong support we're receiving from customers and channel partners."

HP shares are currently gaining 0.30% in after hours trading after closing the day's regular trading session at $30.19, up 74 cents or 2.51%. The shares trade in a 52-week range of $16.57 to $30.28.

HP's Personal Systems revenue for the first quarter rose 4% year-over-year to $8.5 billion. For the quarter, Notebook unit sales were up 5%, while Desktop unit sales were down 3%. In August 2012, HP announced strategic alternatives for this business, but later decided to keep it following a review.

HP performed well in this segment despite the weakness in the PC market. Last month, market research firm Gartner, Inc. (IT) said worldwide PC shipments fell 6.9% year-over-year to 82.6 million units in the fourth quarter of 2013, marking the seventh consecutive quarter of shipment decline.

HP lost the world PC lead to China's Lenovo Group Ltd. during the second quarter of 2013. HP and Lenovo had been virtually neck and neck for the top global position in the PC market throughout 2013, but Lenovo ended the year as the world's top PC vendor.

First quarter Printing revenue declined 2% from a year earlier to $5.8 billion. Revenue for the company's Enterprise Group grew 1% to $7.0 billion in the first quarter. Enterprise Services revenue for the quarter fell 7% to $5.6 billion. HP's software revenue for the first quarter slipped 4% year-over-year to $916 million, while HP Financial Services revenue dropped 9% to $870 million.

Meg Whitman, who was appointed as HP CEO in September 2011, has been making sweeping organizational changes for the past nearly one and half years in a bid to make HP a leaner and meaner company. The company has planned to eliminate 34,000 jobs by the end of its fiscal year 2014.

For the first quarter ended January 31, 2014, the Palo, Alto, California-based company reported net income of $1.4 billion or $0.74 per share, compared to $1.2 billion or $0.63 per share for the year-ago quarter.

Excluding items, adjusted net income for the first quarter was $1.7 billion or $0.90 per share, compared to $1.6 billion or $0.82 per share in the prior year quarter.

On average, 27 analysts polled by Thomson Reuters expected the company to earn $0.84 per share for the first quarter. Analysts' estimates typically exclude special items.

Net revenue for the first quarter fell 1% to $28.15 billion from $28.36 billion in the same quarter last year. Twenty-four analysts had a consensus revenue estimate of $27.19 billion for the first quarter.

Operating margin for the quarter improved to 7% from 6% a year earlier on a reported basis and to 9% from 8% last year on an adjusted basis.

During the first quarter, HP repurchased about 20.4 million shares of its common stock for $565 million and ended the quarter with $16.4 billion in gross cash.

Looking forward to the second quarter, HP forecasts earnings of $0.62 to $0.66 per share and adjusted earnings of $0.85 to $0.89 per share.

For the fiscal year 2014, the company now forecasts earnings of $2.85 to $3.00 per share and adjusted earnings of $3.60 to $3.75 per share. Previously, the company forecast earnings of $2.85 to $3.05 per share and adjusted earnings of $3.55 to $3.75 per share.

Analysts currently expect the company to earn $0.89 per share for the first quarter and $3.67 per share for the fiscal year 2014.