Nearly three years into Meg Whitman's reign as CEO of one of technology's sturdiest and most venerable companies, Hewlett-Packard Co. is still in turnaround mode. When it will return to full-sail growth and profitability remains an open question.
There was bad news and good news in HP's fiscal third-quarter earnings report Aug. 20. The bad: the IT giant posted earnings that were down 29 percent from a year ago, due largely to internal factors, including the costs of thousands of employee layoffs and payments on several expensive past acquisitions.
On the other hand, a streak of 11 straight quarters of declining revenue was snapped with a small but important 1 percent increase. This is largely due to improving sales of new-generation laptop PCs, on which HP has focused a lot of investment in the last few years in competing with Apple and other manufacturers.
Overall in the quarter that ended July 31, HP profited $985 million (52 cents per share). That compared to $1.4 billion, or 71 cents per share, in 2013's third quarter--thus the 29 percent falloff.
Revenue amounted to $27.6 billion, up from 1 percent at the same time last year, beating the Wall Street analysts' average projection of $27 billion. The slight increase was HP's first year-over-year gain in quarterly revenue in nearly three years, or right before Whitman took over for Leo Apotheker as CEO in September 2011.
Laptop sales have been stronger during the past three years than they had the three years prior--though not nearly as healthy as tablet and smartphone sales. Nonetheless, companies such as HP, Dell, Lenovo, Intel, Acer, Asus, and others have seen stock price increases of 25 percent or more in the last year, largely due to this trend.
HP's common stock price has increased 26 percent since the beginning of the year. The stock dropped 32 cents to $34.80 in after-hours trading Aug. 20.
Gartner Research reported that HP's personal computer shipments were down only 2 percent from 2010, after being down 10 percent in 2013 and 4 percent in 2012.
HP's financial performance took a hit mostly because of a $649 million charge to cover a round of layoffs and other restructuring moves. HP is currently ending some product lines and thus eliminating between 11,000 to 16,000 jobs by October. This is in addition to the 34,000 employees that it has already trimmed.
HP currently lists 317,500 full-time employees.
"Overall, I'm very pleased with the progress we've made," Whitman said in a press statement. "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."