H-P guides in-line, announces more job cuts

After releasing its core results early, H-P (HPQ) has provided its full FQ2 report after the close. The IT giant guides for FQ3 EPS of $0.86-$0.90 vs. an $0.89 consensus, and FY14 EPS of $3.63-$3.75 vs. a $3.71 consensus.

H-P also announces it's increasing the size of its job cuts by 11K-16K positions. The company, which had ~317K employees last year, has already announced plans to shed 34K jobs.

$831M was spent on buybacks in FQ2, helping EPS meet estimates in spite of a revenue miss. Gross margin rose 50 bps Y/Y to 24.2%. R&D spend +7% Y/Y to $873M, SG&A spend +1% to $3.39B.

Contributing to the revenue miss: Printing revenue fell 4% Y/Y after falling 2% in FQ1, enterprise hardware fell 2% after growing 1%, and enterprise services once more fell 7%.

PCs were healthier (+7% vs. +4%, with 12% commercial growth offsetting a 2% consumer drop). As was software (flat vs. -4%, with 8% license growth). Financial services -2% vs. -9%.

High-margin printing supplies revenue fell 7%, while printing hardware units rose 1%. In enterprise hardware, a 6% drop in storage and a 14% drop in business critical systems (Itanium weakness) offset a 6% increase in networking. x86 servers rose 1%.

HPQ -1.2% AH after falling 2.3% in regular trading. FQ2 results, PR

From other sites
Comments (7)
  • StepUp
    , contributor
    Comments (559) | Send Message
    "The results marked the 11th straight quarterly revenue decline for the world's largest maker of personal computers."


    Way to keep it consistent HP!
    22 May 2014, 04:36 PM Reply Like
  • Glazroas
    , contributor
    Comments (18) | Send Message
    Maybe if HP would quit wasting money on stock repurchases and ever-increasing dividends they wouldn't need to keep laying off employees.
    22 May 2014, 05:30 PM Reply Like
  • David L. Powell
    , contributor
    Comments (198) | Send Message
    not quite. The business continues to shrink and continues to be overstaffed (IMO). The perversity is that the buybacks & growing dividends are what keeps the stock price going up but then of course result in burning cash to buy overpriced stock. funny stock market...
    22 May 2014, 06:46 PM Reply Like
  • eager1
    , contributor
    Comments (180) | Send Message
    Where is the 3D printer we were promised?
    22 May 2014, 06:28 PM Reply Like
  • yellowstar818
    , contributor
    Comments (2) | Send Message
    HP does not know where its going. The turn around is not working...
    23 May 2014, 09:41 AM Reply Like
  • Seth Walters
    , contributor
    Comments (675) | Send Message
    Since the Fed is controlling asset prices anyway, the Fed should just promise to naked short sell any company into the ground that cuts jobs.
    There's your price stability and full employment, lol.


    Job cuts are the wide road to EPS that leads to destruction. Real leadership would be figuring out how to put their people to work effectively and earn more $. But I'm sure the management will be taking home fat bonuses for their "leadership" roles.
    23 May 2014, 09:47 AM Reply Like
  • Momintn
    , contributor
    Comments (6116) | Send Message
    Strange how the traders are bidding up HPQ. Anyone know why? I thought the pundits didn't like shrinking companies and buybacks. Maybe they really like IBM's model more than they admit. Seems like everyone is trying to become IBM. But I honestly don't think HPQ's Meg Whitman has a clue as to how to do it. Look at the IDC survey on IAAS providers. IBM is the top, HPQ is in a tie for third, and it's a wide spread between the two.
    23 May 2014, 10:18 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs