HP Inc. Posts Revenue Increase as PC Business Rebounds
November 22 2016 - 4:37PM
Dow Jones News
By Don Clark
HP Inc. posted a surprise increase in quarterly revenue, as a
rebound in the company's personal computer business outweighed
pressures facing its printing operations.
The big Silicon Valley company, marking the first anniversary of
its creation through the breakup of Hewlett-Packard Co., on Tuesday
said revenue in the fiscal fourth quarter rose 2%. Most analysts
had expected HP's top line to shrink in the period, as it had for
seven straight quarters.
HP's net income declined 63%, however, in part due to costs of
one-time payments to company retirees. The company's earnings
excluding those items came in higher-than the year-earlier period
but slightly below analysts' average estimates.
Dion Weisler, HP's chief executive, in an interview called the
quarter "a nice roundup to a very challenging but solid year of
execution" for the company. "We are entering 2017 with an upward
trajectory to momentum."
The Palo Alto, Calif., company gets the biggest share of its
revenue from PCs, a market where it is the No. 2 supplier behind
Lenovo Group Ltd. But HP gets most of its profit from selling
printers and the more lucrative ink and toner used with them.
Both businesses have faced headwinds, as consumers have shifted
spending to mobile devices and fewer people print documents. But HP
has shown some success in stemming the decline in PCs by taking a
bigger share of the declining market and focusing on models that
command higher prices and profit margins.
Gartner Inc. recently estimated that HP's share of third-quarter
PC shipments -- which declined 5.7% for all suppliers in the period
-- rose to 20.4% from 18.8% in the year-earlier period. HP said
Tuesday that unit shipments rose 5% while PC revenue was up 4%.
Mr. Weisler said HP's PC team "outperformed all our top
competitors."
The story was a bit less rosy in printing, though Mr. Weisler
pointed to signs of progress there, too. HP said total revenue in
the business declined 8%, with revenues from supplies down 12%. But
hardware unit revenue grew 1%, the first time in recent memory, he
said. And declines by other metrics were less severe than earlier
this year, Mr. Weisler said.
HP announced a deal in September to buy the printer business of
Samsung Electronics Co., a deal that should help the company sell
multifunction printing and copying systems and develop some key
components for the first time internally.
Hewlett Packard Enterprise Co., the other company created in the
breakup, is also reporting results Tuesday. Both companies have
seen their stock prices rise this year on pledges to share cash
with investors.
Mr. Weisler said Tuesday that HP generated $2.8 billion in free
cash flow in the fiscal year ended in October -- more than the
company had previously projected -- and returned 72% to
shareholders in dividends and stock buybacks.
HP reported net income for the fourth period ended Oct. 31 of
$492 million, or 28 cents a share, compared with profit in the
year-earlier period of $1.32 billion, or 73 cents. Revenue rose to
$12.51 billion from $12.27 billion.
On an adjusted basis that excludes restructuring charges and
other one-time items, HP put fourth-quarter earnings per share at
36 cents, compared with its projection in September of 34 cents to
37 cents. Analysts on that basis had predicted per-share profit of
37 cents on revenue of $11.83 billion, according to FactSet.
For the first fiscal quarter, HP said it expects to report
adjusted earnings per share of 35 cents to 38 cents. Analysts'
average estimate was 39 cents, according to FactSet.
Write to Don Clark at don.clark@wsj.com
(END) Dow Jones Newswires
November 22, 2016 16:22 ET (21:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
HP (NYSE:HPQ)
Historical Stock Chart
From Aug 2024 to Sep 2024
HP (NYSE:HPQ)
Historical Stock Chart
From Sep 2023 to Sep 2024