Hewlett-Packard Company reports better-than-expected profit amid rise in corporate server sales

Hewlett-Packard Company reports better-than-expected profit amid rise in corporate server sales

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Hewlett-Packard Company (NYSE:HPQ) reported a good fiscal second quarter profit margin. Thanks to server business which contributed to that surge. The company also beat analysts’ estimates regarding profit margins. It’s a good sign ahead of its planned separation into two companies.

Adjusted profit was 87 cents a share in the second quarter, while analysts projected a profit of 86 cents a share, based on Bloomberg data. The company possibly attains more than $3 billion over three years from restructuring program, started in 2012 and so far 48,000 workers have been fired under this program, and the split, according to company.

“We executed well in a tough market environment and a couple of our businesses did very, very well,” Chief Executive Officer Meg Whitman said in an interview.

The firm’s main profitable businesses, selling servers, software and personal computers, underperformed particularly because of cloud computing and mobile devices which are easy to handle. The splitting of Hewlett-Packard is planned basis so as to give each business more focus and attention. After separation of Hewlett-Packard following the end of the year, one company holds PCs and printers business and the other part sells servers to businesses.

Recently the firm acquired Aruba Networks to push in to wireless-networking domain for better exposure in market. The acquisition also allows the tech giant to compete with Cisco Systems Inc. For remaining stable in the market, the firm also introduced new business edition mobile devices.

Although the company’s sales were down in all the segments including printers, PCs, but that slumped was counterbalance by higher sales of its corporate servers.

The company will continue to look for ore acquisitions after the separation, according to Whitman.

“There’s very interesting things out there that we want to acquire over time,” she said. The company is unlikely to purchase software assets in the near term, she said, because “we have a lot more to do to optimize the portfolio that we have.”

Hewlett-Packard also announced the management reshuffling after the split of the businesses. Cathie Lesjak, current Chief financial Officer, will take the charge of CFO of HP Inc., PC and printer company. Lesjak, who served as the Chief Executive Officer for short time in HP and also a closed companion of Whitman, will become the CEO of corporate server business.

Chris Hsu, will worked as CEO of HP Inc after the split, the firm said on Thursday. Tim Stonesifer will take the post of CFO of Hewlett-Packard’s enterprise group with new appiontment Alan May joining the enterprise business as head of human resources.

The revenue in the Second-quarter was down 6.8 percent to $25.5 billion, compared with analysts’ estimate of $25.7 billion. The company’s net income slipped 21 percent to $1.01 billion compared to the same period of the previous year.

In all sectors the company didn’t performed well. 5.3 percent drop is observed for Personal Computer sales, similar is observed for printer unit which saw revenue to drop 7 percent. Enterprise business showed some resilience and dropped only 1 percent, aided by 11 percent boost in sales of industry-standard servers.

“I don’t see many bright spots,” said Dan Morgan, a senior portfolio manager at Synovus Securities Inc., which owns 288,020 shares of the company.

The Palo Alto California-based firm has given a positive outlook for the current quarter. The company expects adjusted profit of 83 cents to 87 cents a share for ongoing quarter. Analysts’ expect profit of 87 cents.

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I am an independent trader currency and commodity with about eight years of experience. I love the financial world because it is like one big puzzle and I hope we help each other out to solve the puzzle to help us realize our dreams. I received my BBA in Accounting (With Honors) - from The University of Texas - San Antonio. Achievements: Beta Alpha Psi National Accounting Honors Fraternity member, Leadership Challenge Participant, Dean's List. I have passed the Series 63, 22, Texas Real Estate exam, and the DRI Business Continuity exam.

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