Hewlett-Packard reported that its revenues fell 8 percent to $27.2 billion in the third fiscal quarter ended July 31. Non-GAAP profits fell 14 percent to 86 cents a share. So the quarter was slightly off of expectations.
HP’s earnings are a bellwether for the tech economy, though it is heavily weighted toward the PC. The company has been hurt by both a slowing PC market and a weak enterprise business. It is in the midst of cutting 27,000 jobs by the end of 2014 in an attempt to save up to $3.5 billion in spending per year.
Analyst had expected 87 cents a share for non-GAAP earnings and $27.3 billion for the fiscal third quarter.
HP had said before that it expected non-GAAP earnings per share of 84 cents to 87 cents. For the full year, it previously expected $3.50 to $3.60 a share in earnings per share. HP now expects to see $3.53 to $3.57 a share in non-GAAP full-year earnings.
Last quarter, HP’s personal systems group was 27 percent of revenue, printing was 22 percent, enterprise services was 21 percent, enterprise was 24 percent, financial services was 3 percent, and software was 3 percent. HP’s earnings in the second fiscal quarter were $1 billion, down 30 percent from a year ago, and revenue was $27.6 billion, down 10 percent from a year earlier.
In after-hours trading, HP stock was down 2.6 percent to $24.77 a share.
“We once again achieved the financial performance we said we would, delivering $0.86 in non-GAAP diluted earnings per share, within our previously provided outlook of $0.84 to $0.87,” said Meg Whitman, HP president and chief executive officer, in a statement. “I remain confident that we are making progress in our turnaround. We are already seeing significant improvement in our operations, we are successfully rebuilding our balance sheet, our cost structure is more closely aligned with our revenue and we have reignited innovation at HP, with a focus on the customer.”
Bloomberg and AllThingsD reported before earnings that Whitman would replace two major chiefs in the HP business. Chief operating officer Bill Veghte was expected to replace Dave Donatelli as head of the enterprise group. Whitman was promoting Henry Gomez, chief of communications, to chief marketing officer, replacing Marty Homlish. HP confirmed those changes.
Now Whitman has replaced every major business chief since she joined in late 2011. Donatelli and Homlish are being given new roles. In June, Todd Bradley, former head of the PC division, stepped down to head strategic growth initiatives.
Lenovo recently overtook HP as the No. 1 PC maker, and Dell has reportedly been cutting prices to hang on to market share. Whitman has been positioning HP to re-enter the smartphone and tablet markets, which are eating away at the PC’s market share. But nothing has happened yet.
In the most recent quarter, HP personal system revenue was down 11 percent from a year ago with a 3 percent operating margin. Commercial revenue was down 3 percent and consumer revenue was down 22 percent. Desktop sales were down 8 percent in units and notebook units were down 14 percent.
In printing, revenue was down 4 percent from a year ago with a 15.6 percent operating margin. Hardware units were up 5 percent and supplies revenue was down 4 percent.
Enterprise group revenue fell 9 percent with a 3.3 percent operating margin. Networking was flat , industry standard servers were down 11 percent, business critical systems was down 26 percent, storage was down 10 percent. In the enterprise, services were down 9 percent with a 3.3 percent operating margin. Software was up 1 percent, and HP financial services was down 6 percent.