HP revenues hit by falling printer sales
Click:925 Date:2015-05-22 23:49:00 Information Source:Financial Times
Falling sales of corporate technology services and printers as well as the strong dollar pushed revenue down at Hewlett-Packard, as it presses ahead with plans to split in two.
Revenue of $25.5bn in the second quarter was down 7 per cent, or 2 per cent on a constant currency basis, and slightly lower than the consensus forecast for $25.6bn. Sales were down in every segment but enterprise services fell the furthest, down 16 per cent year-on-year, and printer revenue decreased 7 per cent.
But HP’s shares, which closed 2.3 per cent higher, were up a further 1 per cent in after-hours trading after it reported earnings that were slightly higher than expected. Earnings per share on a non-GAAP basis were 87 cents, compared with the average analyst estimate for 86 cents. Net income on a GAAP basis was $1bn.
Meg Whitman, HP chairman and chief executive, said the company was becoming stronger as it headed towards a separation in November.
“Despite some tough challenges, we executed well across many parts of our portfolio, sustained our commitment to innovation, and delivered the results we said we would,” she said.
The company forecast full-year non-GAAP earnings per share in the range of $3.53 to $3.73, in line with analyst expectations, and GAAP earnings per share of between $2.03 and $2.23. Revenue will be flat to slightly down on a constant currency basis.
HP is splitting its global business into two Fortune 50-sized companies — HP Inc, focused on PCs and printers, and Hewlett-Packard Enterprise, centred around corporate hardware, software and services. The division should free up the enterprise unit to make its own deals.
Ms Whitman said she had “confidence” the separation would complete by the end of the fiscal year, as she announced new appointments to the future companies. The leadership structure is now finalised and the workforce has largely been allocated between the new companies.
Cathie Lesjak, HP chief financial officer, will join HP Inc in the same position, supporting Dion Weisler who is due to become chief executive.
Tim Stonesifer, chief financial officer of HP’s Enterprise Group, will become CFO at Hewlett-Packard Enterprise, under Ms Whitman’s leadership. The company also announced that Chris Hsu would be chief operating officer at Hewlett-Packard Enterprise. He had been managing the transition to two companies.
HP slashed its full-year earnings guidance by more than a third when it announced earnings last quarter, blaming the strong dollar as well as restructuring and separation costs. The strong dollar is causing particularly tough competition with Japanese manufacturers, who are benefiting from a weak yen.
Earlier in the day, HP announced plans to spin off its Chinese server unit into a joint venture with China’s Tsinghua University. It will own 49 per cent of the newly formed HC3 company after selling the majority stake for about $2.3bn. HC3 will be a market leader in networking and storage in China, valued at $4.5bn net of cash and debt.
Ms Whitman said HP had found a “terrific partner” in Tsinghua and she was “optimistic” that the joint venture would protect HP’s intellectual property.
She denied the spin-off was a direct response to draft legislation in China which could put pressure on US technology companies.
“China is evolving fast, regardless of legislation, any other thing, the right thing to do in China is to become even more Chinese,” she told the Financial Times. “Tsinghua is a very prestigious partner that is very well respected, with full access to the Chinese market and very close connections to the government.”
