Profits were up 16 percent at 90 cents a share, or $1.7 billion, on revenue of $28.2 billion. The PC market may be beginning to stabilize, CEO says.
Hewlett-Packard, the IT septuagenarian that has been remaking itself in the image of a younger company for several years, turned in a fiscal first-quarter financial report Feb. 20 that showed sales were basically flat yet still outperformed analysts' estimates.
Net income for the Palo Alto, Calif.-based giant in the period ended Jan. 31 was up 16 percent at 90 cents a share, or $1.7 billion, on revenue of $28.2 billion, HP said. Wall Street analysts' consensus had projected profit of 84 cents on revenue of $27.2 billion, Bloomberg reported.
Nonetheless, total income was down about 1 percent overall from $28.4 billion a year ago, and analysts' expectations are that HP will mark the current fiscal year as its third consecutive marked by declining revenue.
"The restructuring program is very much on track, and customers and partners have a lot more confidence in HP than they did two and a half years ago," CEO Meg Whitman said during a conference call. "HP is in a stronger position today than we've been in quite some time."
Whitman took over for the company's previous CEO, Leo Apotheker, in September 2011.
"The progress we're making is reflected in growth across several parts of our portfolio, the growing strength of our balance sheet, and the strong support we're receiving from customers and channel partners," Whitman said in the earnings release statement. "Innovation is igniting our comeback, and at a time when many of our competitors are confronting new challenges, two years of turnaround work is setting us up for an exciting future."
HP's Enterprise Group turned a quarterly profit of $1 billion, or 14.4 percent of revenue, down 1 point year-over-year.
Personal systems revenue was up 4 percent year-over-year at $8.5 billion, with revenue from commercial customers increasing 8 percent and consumer revenue declining, HP said.
Desktop unit sales decreased 3 percent, along with the entire rest of the market, but notebook sales grew by 5 percent. Revenue from HP's enterprise group, which makes servers and storage arrays and provides IT services, grew by 1 percent year-over-year. Sales of high-end servers for high-transactional workloads dropped an alarming 25 percent.
Whitman said on the call that "overall, the PC market contraction is slowing down, and we see signs of stabilization, especially among enterprise customers." A recent Gartner Research report said that personal computer shipments had their steepest decline ever in Q4 2013, a trend that also hit HP pretty hard.
In the quarter, HP introduced two new mobile devices to the market in India, the HP Slate6 and Slate7 VoiceTabs. The company also unveiled the first converged system for hosted desktops, based on the new Moonshot server.
HP's stock peaked at $31 in after-hours trading. Earlier in the day, it climbed 2.5 percent to close at $30.19, leaving the price up a healthy 81 percent over the past 12 months.