Hewlett-Packard Co. certainly did not have a red-letter day on May 21, when it presented its Q2 2015 earnings report. Nonetheless, its stock price improved 3.3 percent to $34.21 -- largely because it still beat Wall Street analysts' projections.
The Palo Alto, Calif.-based IT icon had to admit that its quarterly profits were down 21 percent year-over-year, that overall revenue sank 7 percent, and that it had to spend $745 million in the quarter to divide the company up into HP Enterprise and HP Inc.
Separation costs will continue for months to come, HP said, as the huge, 302,000-employee company breaks up into two independent entities.
It also had to fess up to laying off 3,900 workers in the quarter, which brings to 48,000 the number of HP full-time employees laid off since 2012, when it announced it would shed 55,000 staff members.
Yet the company reported a better-than-expected quarterly profit and spent less on the separation than analysts had expected, so there was most of the good news.
"I'm pleased with where we ended the quarter, the continued success of our turnaround, and the progress we're making on separation," Chairman and CEO Meg Whitman said on a conference call to analysts. "Despite some tough challenges, we executed well across many parts of our portfolio, sustained our commitment to innovation, and delivered the results we said we would. HP is becoming stronger as we head into the second half of our fiscal year and separation in November."
The world's No. 1 printer maker, No. 2 PC seller and No. 4 external disk storage system maker said it expects to spend another $400 million to $450 million in the planned separation of its personal computer and printer businesses from its faster-growing corporate hardware (mostly servers, storage and networking) and service operations.
HP's profit fell to $1.01 billion from $1.27 billion, down 21 percent from Q2 2014, on revenue of $25.45 billion in the quarter, down 7 percent year-over-year.
Ongoing cost reductions, HP's focus on higher-margin sales and strong sales of servers and printers are the key profit drivers. Total costs and expenses fell 5.7 percent to $24 billion in the second quarter ended April 30.
Sales across most of HP's product lines dropped. Its enterprise services unit, which accounts for about a fifth of total revenue, was hit the hardest with a 16 percent skid.
Whitman said HP CFO Cathie Lesjak will become the Chief Financial Officer of HP Inc., based in Houston, while Tim Stonesifer, currently CFO of HP's Enterprise Group, will become the CFO of Hewlett Packard Enterprise in Palo Alto.