HPQ HP Inc

By Aaron Tilley 

HP Inc. posted lower fiscal fourth-quarter earnings as its printing business remained weak, helping to spur an increasingly acrimonious takeover approach from rival Xerox Holdings Corp.

HP on Tuesday said net income fell to $388 million from $1.45 billion a year earlier, when the company's results were boosted by a one-time tax benefit.

For the quarter ended Oct. 31, HP reported per-share earnings of 26 cents, down from 91 cents and short of the 51 cents analysts surveyed by FactSet expected. Adjusted earnings, though, rose 11% to 60 cents a share, ahead of the 58 cents analysts expected.

The company that is focused on selling computers and printers since Hewlett-Packard Co. split in 2015 said revenue for the quarter rose to $15.41 billion compared with $15.37 billion a year ago. The struggling printer business logged a 6% year-over-year drop in sales. Revenue for the computer-making unit rose 4%, the company said.

The earnings cap a tumultuous fiscal year for HP, coming at a time when talks with Xerox have raised questions about its future. In August, HP Chief Executive Dion Weisler stepped down, citing a family health matter. HP also has been struggling with falling demand in its printing business, which had been a key profit driver. That has weighed on the stock.

HP veteran Enrique Lores, who has taken over as CEO, last month announced the company would be eliminating around 7,000 to 9,000 jobs, or 16% of its workforce. The three-year restructuring program aims to generate $1 billion in annual savings, the company has said.

Xerox, which announced its own cost-cutting plan in February, formally approached HP about a possible takeover earlier this month. The $33 billion offer, first reported by The Wall Street Journal, would combine two of the most iconic names in printing that both have been facing reduced demand.

HP has rejected Xerox's offer, which it said undervalued the company, though it added it was open to talks. "HP has numerous opportunities to create value for HP shareholders on a standalone basis," the company said in a letter to Xerox. "We will not let aggressive tactics or hostile gestures distract us from our responsibility to pursue the most value-creating path."

Xerox Chairman John Visentin, in a letter sent to HP on Tuesday, said the company would now directly engage with HP shareholders to convince them of the merits of a deal.

Activist investor Carl Icahn, who has a 10.6% stake in Xerox, is backing the combination and has taken a 4.24% stake in HP, the Journal has reported.

For the current fiscal year, HP said earnings per share is expected to be between $2.00 to $2.10, compared with $2.07 for the year just ended. Analysts have forecast $2.07 for the current year.

"Our strategy is working," Mr. Lores said in a statement, adding he was confident in the business headed into the current fiscal year.

(END) Dow Jones Newswires

November 26, 2019 16:37 ET (21:37 GMT)

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