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Leo Apotheker’s first quarter results as chief executive of Hewlett-Packard have a bit of a Mark Hurd feel to them.
HP’s revenue was up 3.7 percent to $32.2 billion in its first quarter of the 2011 fiscal year, up from $31.2 billion the same quarter in its 2010 fiscal year. But the company’s operating profit shot up 16 percent to $2.61 billion in the first quarter of its 2011 fiscal year, compared to $2.25 billion the same quarter a year earlier.
That’s because HP’s gross margins rose by 1.5 percentage points to 24.4 percent — meaning the company was operating more efficiently despite slimmer revenue growth. Despite the strong showing, HP trimmed its outlook for the full fiscal year — saying they would be around $2 billion short of their original expectations from Wall Street analysts. That weakness will probably come from PC sales — since consumers are still limiting their discretionary spending — and from their services sector, Apotheker said on the company’s quarterly conference call.
Mark Hurd, HP’s former chief executive, also had a penchant for cutting costs where he could to bring about a higher profit and a cleaner balance sheet — sometimes at the expense of research within the company. Hurd’s downfall at HP came after Jodie Fisher, a former HP marketing contractor, complained of sexual harassment. He eventually went on to join HP rival Oracle as president, prompting HP to pick up Apotheker as its newest CEO.
The company’s enterprise segment also did quite well, with revenue growing 22 percent in its enterprise storage, servers and networking to $5.6 billion in the first quarter of its 2011 fiscal year — up from $4.6 billion the same quarter a year earlier. HP is still going strong with its printer business — particularly with its web-connected printers, where sales doubled, Apotheker said on the company’s quarterly conference call to discuss earnings. Printer shipments were up 7 percent as a whole, and commercial printer shipments were up 33 percent.
There’s still no word as to how the company’s recent ventures with Palm will play out. HP recently unveiled two new phones and a tablet computer running Palm’s WebOS mobile operating system in its first entry to the smartphone market and its first serious attempt to compete with Apple and Google in tablets. Both Apotheker and analysts didn’t discuss how the new devices might perform, and how that would fit into the company’s guidance, on the conference call to discuss the company’s quarterly earnings.
Investors didn’t take the guidance shortfall too well, slamming HP’s shares in extended trading on Tuesday. Shares of HP were down about 12 percent to $42.40 after the bell.