HP yesterday reported earnings and revenue numbers that surpassed Wall Street expectations.
The computer maker's revenue for the quarter, which ended January 31, was $21.5 billion, up 10 per cent from $19.5 billion its year-earlier quarter, but profit remained flat. HP reported net earnings of $943 million for the quarter, up slightly from the $936 million it reported in 2004.
Earnings per share were $0.32, up from the year-earlier figure of $0.30, when calculated using generally accepted accounting principles (GAAP). Before charges, the company's operating profit was $1.3 billion with earnings per share of $0.37, which were $0.03 above expectations.
Work to be done
There is "work to be done to improve our profitability," said a written statement attributed to Robert Wayman, the company's chief financial officer, who is also serving as interim CEO.
HP executives declined to comment on how their company's work at hiring a new CEO has progressed since Fiorina was let go last Wednesday.
Fiorina isn't the only HP employee to be laid off by HP recently. The company absorbed $60 million in restructuring costs during the first quarter as it laid off more than 600 employees, Wayman said during a conference call with analysts. Another $140 million in restructuring costs will be incurred in the second quarter, he added, without saying how many layoffs this would entail.
Business unit breakdown
"It will still be heavily in TSG," he said, referring to the company's Technology Solutions Group (TSG), which sells the company's enterprise hardware, software and services offerings.
TSG continued to be a drag on profitability. The business unit's operating profit was $312 million for the quarter, down from the year-earlier figure of $365 million.
HP earned just $71 million in profit from its Enterprise Storage and Servers business, which took in $4 billion in revenue, and the software group lost $40 million on $240 million in sales. HP Services did better, earning $281 million in profit on $3.8 billion in revenue.
During the next quarter, the company will focus on returning its struggling storage business to profitability with a updating of its Enterprise Virtual Array line of storage devices, expected in May, said Ann Livermore executive vice president of TSG. "We're certainly not where we want to be yet in storage," she said.
Personal computers remained a low-margin business for HP, earning $147 million on revenue of $6.9 billion, the unit's most profitable quarter since 2000, according to HP.
As usual, the company's imaging and printing group remained the cash cow, bringing in $932 million in profit on revenue of $6.1 billion.
HP expects second-quarter results to be in the same range as its first-quarter figures, with revenue in the range of $21.2 billion to $21.6 billion and earnings per share in the range of $0.35 to $0.37.