When a gig is 2 dollars from HP and 1.5 cents from google, is it any wonder. Aivars Lode avantce
By Shira Ovide
Profitability Has Risen Under Whitman, but Company Is Shrinking
This is Meg Whitman ’s Hewlett-Packard Co. : Dramatically improved profits and no revenue growth.
In her three years as CEO of the Silicon Valley pioneer, Ms. Whitman’s savvy management has led to higher profitability, more cash in company coffers and greater confidence among investors. But Ms. Whitman presides over a shrinking giant. Revenue has declined for 12 out of the last 13 quarters, including a 2.5% decline in the three months ended Oct. 31 compared with a year earlier, the company said Tuesday.
Stagnant growth and fierce competition prompted Ms. Whitman to announce last month a plan to break H-P in two. Her idea, which was greeted warmly by much of Wall Street, is that two more-tightly focused companies will be better able to navigate rapid shifts in the tech industry. The half of H-P that Ms. Whitman is slated to run is billed as the growth engine. The worry for her is that it’s not.
What will be called Hewlett-Packard Enterprise—a collection of products and services, including hardware, software, and consulting, marketed to corporate customers—posted a 4.7% revenue decline in the fourth quarter. The company’s old-guard business lines in personal computers and printers, which will form the second company, dubbed HP Inc., posted a scant revenue increase. The breakup is expected to be completed by fall of 2015.
H-P said all the company’s business segments improved their operating-profit margin in the fourth quarter compared with a year earlier, the first time H-P has managed that feat for a couple of years.
What will be called Hewlett-Packard Enterprise—a collection of products and services, including hardware, software, and consulting, marketed to corporate customers—posted a 4.7% revenue decline in the fourth quarter. The company’s old-guard business lines in personal computers and printers, which will form the second company, dubbed HP Inc., posted a scant revenue increase. The breakup is expected to be completed by fall of 2015.
H-P said all the company’s business segments improved their operating-profit margin in the fourth quarter compared with a year earlier, the first time H-P has managed that feat for a couple of years.
Meanwhile, H-P’s personal computer business, which the company almost ditched three years ago, has become a star. Revenue from PCs rose 4%, continuing several periods of rising quarterly sales. H-P executives reiterated Tuesday that hardware sales are benefiting from companies and consumers rushing to upgrade aging PCs.
Overall in the quarter, H-P reported net income of $1.33 billion, or 70 cents a share, down 5.9% from $1.4 billion, or 73 cents a share, a year ago.
Ms. Whitman said, as recent PC-market data has showed, that the biggest personal-computer vendors such as H-P are boosting sales, while smaller vendors are losing ground.
The profit line watched closely by Wall Street, which strips out some expenses such as those associated with layoffs, was $1.06 a share. That figure matched the average of analyst estimates, according to Thomson Reuters.
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