Hewlett-Packard sales exceed expectations



SAN FRANCISCO — Hewlett-Packard reported fiscal fourth-quarter revenue and profit that topped analysts’ estimates, boosted by corporate demand for servers, computers and networking equipment.

Revenue for the period that ended Oct. 31 was $29.1 billion, compared with the $27.8 billion average estimate of analysts, the company said. Profit excluding some items was $1.01 a share, compared with the $1 average estimate.

CEO Meg Whitman, in her third year at the helm, is cutting costs and rebuilding relationships with customers and resellers to move past a slump in which the company churned through three CEOs and lost share in almost all of its key markets. Business demand for PCs has helped offset a global slump, while Whitman renewed product development in areas including printers and computer servers.

“The enterprise PC market seems to be stabilizing and Meg’s made progress,” Jayson Noland, an analyst at Robert W. Baird & Co. who has the equivalent of a hold rating on the stock, said in an interview. “She’s picked morale up from a low point under Leo,” he said, referring to former CEO Leo Apotheker, who was ousted in 2011 in favor of Whitman.

Net income was $1.41 billion, or 73 cents a share, compared with a $6.85 billion loss, or $3.49 a share, in the fourth quarter of last year. Revenue in the same period a year earlier was $29.96 billion. Cash flow from operations increased 10 percent.

A year ago at this time, the company disclosed an investigation into accounting fraud at its Autonomy software unit, which it had bought for $10.3 billion. Hewlett-Packard took an $8.8 billion writedown on the acquisition.

Profit excluding some items will be 82 cents to 86 cents a share for the current period, compared with the average 85-cent estimate, according to data compiled by Bloomberg.

Whitman made her forecast even as the coming year has been a moving target. The CEO had initially said revenue would rise in fiscal 2014 as PC sales stabilized, then scrapped that prediction in August amid a prolonged PC slump and weak demand for data-center equipment and services. At an Oct. 9 meeting with analysts in San Jose, Calif., she said the year-over-year sales decline would moderate after this year.

In the fourth quarter, revenue in the company’s enterprise group — which includes servers, storage and networking gear — rose 1.8 percent from a year earlier. There were a few other pockets of growth, including commercial PCs, where revenue increased 4 percent. Sales declined in most other businesses, such as consumer PCs, printers, software and enterprise services.

Corporations are spending more on technology, with companies upgrading to PCs that have Microsoft’s newer Windows operating system and away from Windows XP, said Noland.

Hewlett-Packard’s earnings report follows tepid results from enterprise computing suppliers including Cisco Systems and International Business Machines. Cisco on Nov. 13 forecast its first quarterly sales decline in four years as the networking equipment maker cited slower spending by phone companies and large corporations.

IBM on Oct. 29 said it added $15 billion to its stock buyback plan after a sixth straight quarter of declining sales.

Whitman has rewarded shareholders who held on the past few years. The company said at the Oct. 9 analyst meeting that at least 50 percent of its free cash flow will be returned to shareholders via dividends and buybacks in 2014.

Whitman is trying to make the most of a technology behemoth that sells everything from PCs and home printers to the servers, networking gear and software that power corporate data centers. Hewlett-Packard is behind in mobile computing, where tastes are shifting from notebooks to tablet computers and smartphones, and is competing with healthier rivals including Apple and Samsung Electronics.

In the corporate computing market, Hewlett-Packard is squaring off against Cisco, EMC, Oracle, IBM and Dell, which last month went private in a $24.9 billion leveraged buyout by its founder. A host of enterprise computing startups are also winning a bigger chunk of companies’ spending.

At the Oct. 9 meeting, Hewlett-Packard told analysts profit for fiscal 2014 would be $3.55 to $3.75 a share and that sales are stabilizing. Analysts on average expect sales of $107.4 billion and earnings of $3.64 a share.