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Last Update: 22-Feb-13 08:09 ET
Hewlett Packard shares rise 4% following better than expected earnings
Hewlett-Packard (HPQ $17.79 +0.69) reported first quarter earnings of $0.82 per share, excluding non-recurring items, $0.11 better than the Capital IQ consensus of $0.71, while revenues fell 5.6% year/year to $28.36 billion versus the $27.79 billion consensus. The company issued upside guidance for the second quarter with EPS of $0.80-0.82, excluding non-recurring items, versus the. $0.77 Capital IQ Consensus Estimate. The company reaffirmed guidance for FY13, sees EPS of $3.40-3.60, excluding non-recurring items, vs. $3.33 Capital IQ Consensus Estimate. Personal Systems revenue was down 8% year over year with a 2.7% operating margin. Commercial revenue decreased 4%, and Consumer revenue declined 13%. Total units were down 5% with Desktop units up 10% and Notebooks units down 14%. Printing revenue declined 5% year over year with a strong operating margin of 16.1%. Total hardware units were down 11% year over year. Commercial hardware units were down 6% year over year, and Consumer hardware units were down 13% year over year. Enterprise Group revenue declined 4% year over year with a 15.5% operating margin. Networking revenue was up 4%, Industry Standard Servers revenue was down 3%, Business Critical Systems revenue was down 24%, Storage revenue was down 13% and Technology Services revenue was down 1% year over year. Enterprise Services revenue declined 7% year over year with a 1.3% operating margin. Application and Business Services revenue was down 9% year over year, and IT Outsourcing revenue declined 6% year over year. Software revenue was down 2% year over year with a 17.0% operating margin. Support revenue was up 11% while license revenue was down 16% and services revenue was down 8% year over year. HP Financial Services revenue grew 1% year over year as a 1% increase in net portfolio assets was offset by a 25% decrease in financing volume. The business delivered a 10.6% operating margin. HP generated $2.6 billion in cash flow from operations in the first quarter, up 115% from the prior-year period. Inventory ended the quarter at $6.4 billion, with days of inventory down 2 days year over year to 26 days. HP also utilized $253 million of cash during the quarter to repurchase ~19.2 million shares of common stock in the open market. HP exited the quarter with $13.1 billion in gross cash.
