Hewlett-Packard Beats EPS, Revs Dip - Analyst Blog
22 Febbraio 2013 - 3:17PM
Zacks
Hewlett-Packard Company (HPQ) reported
first-quarter 2013 earnings per share (EPS) of 82 cents, exceeding
the Zacks Consensus Estimate of 71 cents. However, revenues and
earnings declined considerably compared with the comparable
prior-year quarter.
Revenues
Revenues declined 5.5% year over year to $28.4 billion. The
decline in revenues is consistent with the last quarter. The
company’s share gains and high value ink hardware as well as a cost
related to the multifunction of the portfolio are expected to be
favorable.
Hewlett-Packard’s new ink technology provides innovation for the
SMB customers, while the launch of the new Officejet Pro X admit
created strong customer interest for the product.
Segmental Revenue for the First Quarter
Personal Systems revenue declined 8% year over
year. Commercial revenue declined 4% and Consumer revenue declined
13%. Within this segment, total units declined 5% with Desktops
moving up 10% and Notebooks moving down 14%.
Printing revenue declined 5% on a
year-over-year basis. Total hardware units were down 11% year over
year. The Commercial hardware units were down 6% year over year,
and Consumer hardware units were down 13% year over year.
Enterprise Group (EG) revenue declined 4% year
over year but Networking revenue was up 4%. This apart, the
Industry Standard Servers revenue dipped 3%. Business Critical
Systems revenue was down 24%, Storage revenue was down 13% and
Technology Services revenue was down 1% year over year.
Enterprise Services (ES) revenue were down 7%
year over year, primarily due to a 9% decline in Application and
Business Services revenue and a 6% fall in IT Outsourcing revenue.
Software revenue declined 2% year over year. In
this segment, support revenue was up 11%, while license revenue was
down 16% and services revenue was down 8% year over year.
HP Financial Services revenue climbed 1% year
over year aided by a 1.0% increase in net portfolio assets squared
off to a certain extent by a 25% decrease in financing volume.
Operating Results
Gross margin for the first quarter was 22.3%, down 10 basis
points (bps) on a year-over-year basis. The fall was attributable
to tough pricing environment in the company’s personal systems
market, coupled with contractions in margins within EG and ES,
which were partially offset by the expansion in printing as margin
improved in ink hardware and toner.
GAAP earnings per share were 63 cents compared with 73 cents in
the prior-year quarter. After adjusting for special items
like Amortization of purchased intangibles, Impairment of goodwill,
restructuring and acquisition related charges, non-GAAP net
earnings per share were 82 cents compared with 92 cents in the
prior-year quarter.
Balance Sheet, Cash Flow
Hewlett-Packard generated $2.56 billion in cash from operations
versus $4.06 billion in the previous quarter. The company ended the
quarter with $12.6 billion in cash and cash equivalents versus
$11.3 billion in the previous quarter. The company exited the
quarter with a long-term debt balance of $21.7 billion, marginally
lower than $21.8 billion in the previous quarter.
Guidance
For the second quarter of fiscal 2013, the company expects
non-GAAP EPS in the range of 80 to 82 cents and GAAP EPS in the
range of 38 to 40 cents.
For fiscal 2013, HP estimates non-GAAP EPS in the range of $3.40
to $3.60 and GAAP EPS in the range of $2.30 to $2.50, in line with
HP's previously communicated outlook. For fiscal 2013, non-GAAP EPS
estimates exclude after-tax costs of approximately $1.10 per
share.
Summary
Hewlett-Packard’s first-quarter 2013 earnings exceeded the Zacks
Consensus Estimate, but revenues declined from the year-ago period.
Results were negatively impacted by macroeconomic factors, lower
order renewal, and reduction in business fundamentals in some
segments.
The company is taking major steps to revive some of its
businesses. Management is taking steps to manage costs, drive
growth and improve the health of its balance sheet.
Further, the PC business is affected to a considerable extent
and is taking a toll on the company’s business. This apart, the
printer business looks challenging, given the continuous roll out
of printing devices at competitive prices.
Given the above-mentioned factors, Hewlett-Packard carries a
Zacks Rank #3 (Hold).
The other good investment stocks in the technology sector would
be
Symantec Corporation (SYMC), with a Zacks Rank
#1 (Strong Buy)
CA Inc. (CA), with a Zacks Rank #2 (Buy)
Advent Software (ADVS), with a Zacks Rank #1
(Strong Buy).
ADVENT SOFTWARE (ADVS): Free Stock Analysis Report
CA INC (CA): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
SYMANTEC CORP (SYMC): Free Stock Analysis Report
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