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HP Q3 financials show increased revenues, drop in net earnings

updated 07:19 am EDT, Thu August 21, 2014

HP continues to struggle in number of areas despite revenue improvement

HP's quarterly revenue in the last three months has gone up, according to its Q3 financial results announcement. Net revenue in the third quarter reached $27.6 billion, representing a 1-percent gain on the same period last year, and an improvement on the previous quarter's $27.3 billion, though elsewhere in the figures, it continues to struggle.

Net Earnings and net earnings per share (EPS) dropped by 29 percent and 27 percent year-on-year respectively, with the net earnings now at $1 billion and the EPS earnings down to $0.52. The second quarter EPS was $0.66, though that figure was actually up from the same period last year's reported $0.55 EPS.

Approximately $3.6 billion in cash flow was generated in the period, up by 36 percent on last year. While it used $299 million for divided payments of $0.16 per share, as well as $582 million to repurchase 17.5 million shares of common stock, it managed to leave the quarter with $14.8 billion in gross cash in its warchest.

Personal systems revenue rose 12 percent year-on-year, with an operating margin of 4 percent. Commercial and consumer revenue increased by 14 percent and 8 percent respectively, with desktop units up 9 percent and notebooks up 18 percent. Printing revenue dropped 4 percent year-on-year, with an 18.4 percent operating margin, and while total hardware units were down 5 percent, consumer hardware dropped more than commercial, with 6 percent and 2 percent respective falls.

Enterprise group continued to be strong for the company, with a 2 percent year-on-year revenue improvement on an 14 percent operating margin, with networking revenue and Industry Standard Servers revenue up 4 percent and 9 percent. These were countered by a 4 percent fall in storage revenue, a 3 percent drop in Technology Services, and an 18 percent revenue reduction in Business Critical Systems. Enterprise services was down by 6 percent year-on-year, with an operating margin of 4.1 percent. Both Application and Business Service revenue and Infrastructure Technology Outsourcing revenue declined, by 4 percent and 8 percent respectively.

"Overall, I'm very pleased with the progress we've made," advised chairman, CEO, and president Meg Whitman. "When I look at the way the business is performing, the pipeline of innovation and the daily feedback that I receive from our customers and partners, my confidence in the turnaround grows stronger." In the previous quarter, the company expanded its austerity measures in the face of poor results, revealing it would eliminate between 11,000 and 16,000 jobs at the company globally.

For the fourth quarter, HP estimates net EPS to be somewhere between $0.83 and $0.87, with the estimates for the fiscal 2014 putting the net EPS in the range of $2.75 to $2.79.

by MacNN Staff




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