Computer and printer maker Hewlett-Packard Co. (HPQ) said Tuesday after the markets closed that its fourth quarter profit fell 6% from last year, as revenue declined 2%.
The company's quarterly earnings per share, excluding items, came in line with analysts' expectations, but its quarterly revenue fell short of analysts' forecast.
At the same time, the company gave a downbeat earnings outlook for the current quarter, but maintained its fiscal year 2015 earnings forecast.
"I'm excited to say that HP's turnaround continues on track," said Meg Whitman, chairman, president and chief executive officer, HP. "In FY14, we stabilized our revenue trajectory, strengthened our operations, showed strong financial discipline, and once again made innovation the cornerstone of our company. Our product roadmaps are the best they've been in years and our partners and customers believe in us. There's still a lot left to do, but our efforts to date, combined with the separation we announced in October, sets the stage for accelerated progress in FY15 and beyond."
HP shares are currently losing 1.14% in after hours trading after closing the day's regular trading session at $37.63, up 13 cents. The shares trade in a 52-week range of $25.09 to $38.25.
Whitman, who was appointed HP CEO in September 2011, had been making sweeping organizational changes for the past nearly one and half years in a bid to make HP a leaner and meaner company. In May, HP said that it would eliminate 11,000 to 16,000 more jobs than the previously estimated 34,000 announced in connection with a multi-year restructuring plan adopted by the company in May 2012.
Last month, HP announced its plans to separate into two new independent publicly traded Fortune 50 companies, comprising Hewlett-Packard Enterprise, and HP Inc. Hewlett-Packard Enterprise will comprise HP's enterprise technology infrastructure, software and services businesses. Personal systems and printing will do business as HP Inc. The deal is expected to be completed by the end of fiscal 2015.
HP's Personal Systems revenue for the fourth quarter rose 4% year-over-year to $8.9 billion. For the quarter, notebook unit sales were up 8%, but desktop unit sales were down 2%. In August 2012, HP announced strategic alternatives for this business, but later decided to keep it following a review.
HP performed relatively well in this segment despite the weakness in the PC market. Last month, market research firm Gartner, Inc. (IT) said worldwide PC shipments fell 0.5% year-over-year to 79.4 million units in the third quarter of 2014. HP lost the world PC lead to China's Lenovo Group Ltd. during the second quarter of 2013.
On Tuesday, market research firm International Data Corp. said it now expects worldwide PC shipments to fall by 2.7% in 2014, an improvement from its previous forecast of a 3.7% decline.
Fourth quarter Printing revenue fell 5% from a year earlier to $5.7 billion. Revenue for the company's Enterprise Group declined 4% to $7.3 billion in the fourth quarter. Enterprise Services revenue for the quarter dropped 7% to $5.5 billion. HP's software revenue for the quarter fell 1% to $1.09 billion, while HP Financial Services revenue slipped 1% to $906 million.
For the fourth quarter ended October 31, 2014, the Palo, Alto, California-based company reported net income of $1.33 billion or $0.70 per share, compared to $1.41 billion or $0.73 per share for the year-ago quarter.
Excluding items, adjusted net income for the fourth quarter was $2.01 billion or $1.06 per share, compared to $1.96 billion or $1.01 per share in the prior year quarter.
On average, 26 analysts polled by Thomson Reuters expected the company to earn $1.06 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Net revenue for the fourth quarter fell 2% to $28.41 billion from $29.13 billion in the same quarter last year. Twenty-three analysts had a consensus revenue estimate of $28.76 billion for the fourth quarter.
Operating margin for the quarter improved to 6.7% from 6.6% a year earlier, while adjusted operating margin for the quarter increased to 9.6% from 9.0% last year.
During the fourth quarter, HP repurchased about 21.7 million shares of common stock for $750 million and exited the quarter with $15.5 billion in gross cash.
Looking forward to the first quarter, the company forecasts earnings of $0.72 to $0.76 per share and adjusted earnings of $0.89 to $0.93 per share.
For the fiscal year 2015, the company continues to expect earnings of $3.23 to $3.43 per share and adjusted earnings of $3.83 to $4.03 per share.
Analysts currently expect the company to earn $0.93 per share for the first quarter and $3.95 per share for the fiscal year 2015.
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