HP's Whitman points to 'signs of improvement' in first-quarter results

David Ward, San Diego
Friday, February 22, 2013

HP's revenues and earnings fell less than analysts had feared in yesterday's first quarter results announcement, buying chief executive Meg Whitman time for her proposed five-year turnaround.

The US-based giant posted a 6% year-on-year decline in Q1 revenues to $28.4bn, while net income fell 16% to $1.2bn. Both numbers beat Wall Street estimates, prompting Whitman to remark "the patient showed some improvement".

Commercial printer revenue was down 9% at $1.3bn while hardware units were down 6% versus the prior year period.

During a conference call with analysts to discuss the results, Meg Whitman once again shot down speculation that HP was looking to spin off its printing or services divisions in order to maximize shareholder value, stressing: "We have no plans to to break up the company. I feel quite strongly that we are better and stronger together."

Whitman went on to note: "The turnaround is on track, and we did better than we expected that we would. The patient showed some signs of improvement, and I think we should be encouraged."

Revenues from HP's printing division, including both consumer and commercial printers, as well as support and consumables fell by 5% compared with the same quarter a year earlier to $5.9bn, albeit with 16% margins.

Chief financial officer Cathie Lesjak did note: "Indigo also had another strong quarter," but most of printing commentary by both Lesjak and Whitman was focused on office space and ink sales.

Whitman also made little mention of Autonomy, the UK software company that was acquired before she came on board. Late last year, HP took an $8.8bn write-down tied to the purchase amid allegations that Autonomy's management had inflated sales numbers prior to the acquisition.

"Our Autonomy business has begun to stabilize, but it is still a work in progress and will take time to get  back on track," she said.

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