HP just released its Q1 2013 earnings report and for once, the company beat analyst expectations: revenue was once again down 6% to $28.4 billion, but still higher than most analysts expected. The company reported an income of $1.2 billion and EPS of $0.82. Last quarter, HP still reported earnings of $30 billion and a net loss of $6.9 billion after its $8.8 billion write-down due to alleged accounting fraud at Autonomy prior to HP acquiring the company.
The stock market is reacting very positively to this news. HP’s stock is currently trading at $18.35 in after-hours trading, up $7.3%.
The general consensus among analysts was that HP’s total revenue would decline by about 7.5% compared to the year-ago quarter and that revenue would be around $27.79 billion, with a net income of around $1.39 billion and earnings per share would be around $0.71, a decline of 24% compared to last year’s EPS of $0.92. HP clearly beat these expectations.
After last year’s $17 billion write-off after the acquisitions of Electronic Data Systems and Autonomy, as well as five previous quarters of declining revenues, many shareholders were hoping that CEO Meg Whitman would be able to stop the company from sinking even further.
HP’s ailing PC business shows no sign of recovering so far. After a 14% decline in Q4 2012, the company reported n 8% decline in revenue from personal computers for this quarter. With its Servers, Storage and Networking revenue also dropping by 9% in Q4 2012 and 4% this quarter, the only area where HP really made some progress last time around was in software, where revenue grew 14%, but revenue from this business declined by 2% last quarter.
“We beat our non-GAAP diluted EPS outlook for the quarter by $0.11 per share, driven by improved execution, improvement in our channel and go-to-market efforts and the impact of the restructuring program we announced in May 2012,” said Meg Whitman, HP president and chief executive officer. “While there’s still a lot of work to do to generate the kind of growth we want to see, our turnaround is starting to gain traction as a result of the actions we took in 2012 to lay the foundation for HP’s future.”
HP, of course, faces a lot of headwind given that sales of its core products, including PCs, printers and servers, are on a downward trend that the whole industry is feeling and that isn’t likely to recover anytime soon. The company missed its chance to become a player in the mobile phone and tablet market and it remains to be seen if Whitman and her team can turn the company around.
For the second quarter of 2013, HP estimates that non-GAAP diluted EPS will be in the range of $0.80 to $0.82 and GAAP diluted EPS will be in the range of $0.38 to $0.40.
Here are the full segment results from HP: