Hewlett-Packard released the earnings results from its fourth fiscal quarter after closing bell tonight, posting adjusted earnings of 93 cents per share and $25.7 billion in revenue, a 9% year over year decline. Analysts had been expecting earnings of 96 cents per share and $12.86 billion in revenue. HP had guided for adjusted earnings of between 92 cents and 98 cents per share for the quarter.
In last year’s fourth quarter, the company reported earnings of $1.06 per share and $28.4 billion in revenue.
David Einhorn's Greenlight Capital was down 0.1% for the first quarter, underperforming the S&P 500's 6.2% return. In their letter to investors, which was reviewed by ValueWalk, the Greenlight team said a lot happened during the first quarter even though they made just a handful of changes to the portfolio and essentially broke even. Q1 Read More
Hewlett-Packard’s profits edge higher
Reported earnings were 73 cents per share, compared to last year’s 70 cents and much higher than the previously provided guidance of between 12 cents and 18 cents per share. As a reminder, Hewlett-Packard spun off its enterprise technology infrastructure, software, services, and financing segments into a separate business as of Nov. 1. After the spinoff, Hewlett-Packard’s new name is simply HP.
Hewlett-Packard’s Personal Systems revenue declined 14% year over year, while Commercial revenue fell 15% and Consumer revenue declined 12%. Units fell 12%, including a 17% decline in Desktops and a 5% decline in Notebooks. Hardware units fell 12%, with a 14% decline in Consumer hardware units. Printing revenue fell 14% on the back of a 17% decline in total hardware units and a 23% decline in Commercial hardware units. Consumer hardware units in the division declined 14%, and Supplies revenue fell 10% from last year.
HP Enterprise Group spun off
HP recorded a 2% increase in Enterprise Group revenue with a 5% increase in revenue from Industry Standard Servers, a 7% decline in Storage revenue, an 8% decline in revenue from Business Critical Systems, a 35% increase in Networking revenue, and an 11% decline in revenue from Technology Services.
The company saw a 9% decline in Enterprise Services revenue, including a 5% decline in Application and Business Services revenue and an 11% decline in revenue from Infrastructure Technology Outsourcing. Revenue from HP’s Software business fell 7%, including a 6% decline in revenue from Licensing, a 9% decline in support revenues, a 3% decline in professional services revenue, and a 2% decline in revenue from software-as-a-service. The Financial Services business recorded an 11% decline in revenue.
Hewlett-Packard releases solid guidance
Despite all the year over year sales decline, Hewlett-Packard Enterprise, now a separate company, released solid guidance for fiscal 2016. The company expects adjusted earnings of 75 cents to 85 cents per share for fiscal 2016, compared to the consensus estimate of 74 cents per share. However, HP continues to expect problems, as management guided for adjusted earnings of between $1.59 and $1.69 per share, coming up short of the FactSet estimate of $1.70 per share.
Hewlett-Packard Enterprise shares rose by more than 3% in afterhours trading, while HP stock slumped by as much as 5.12% to $13.90 per share following tonight’s earnings report.