) reported fourth quarter 2012 earnings per share (EPS) of $1.16,
exceeding the Zacks Consensus Estimate. However, revenue and
earnings declined considerably compared with the prior-year
quarter. Shares slumped following the earnings release.
Revenues declined 6.7% year over year to $29.9 billion.
revenue declined 14.0% on a year-over-year basis. Within this
segment, the Commercial revenue declined by 13.0% year over year,
while the Consumer revenue plunged 16.0%.
revenue dropped 5.0% on a year-over-year basis.
revenue declined by 6.0% on a year-over-year basis. Within this
segment, the technology Services revenue dropped 4.0% year over
year, Application and Business Services revenue declined by 7.0%
from the year-ago quarter, IT Outsourcing revenue declined by
Enterprise Servers, Storage and Networking
witnessed a revenue decline of 9.0% on a year-over-year basis.
Within this segment, the Networking revenue was up 7.0%, while
the Industry Standard Servers, Business Critical Systems and
Storage revenues were down 7%, 25%, and 13% year over year,
revenue increased 14.0% year over year. The segment revenue was
aided by 9.0% license revenue growth, 9.0% support revenue
growth, and 48.0% revenue growth in services.
HP Financial Services
revenue inched up 1.0% from the year-ago period as an 11% decline
in financing volume offset the 3.0% increase in net portfolio
Gross margin for the quarter was 24.2% compared with 21.2% in
the year-ago quarter. Gross margin was positively impacted by
modest cost control, and increase in the sales mix of high margin
Diluted GAAP loss per share was $3.49 compared with earnings
per share of 12 cents in the prior-year quarter. This loss can be
attributed to the write down in lieu of impairment charges. After
adjusting for special items, non-GAAP net earnings per share were
$1.16 compared with $1.17 in the prior-year quarter.
Balance Sheet, Cash Flow
Hewlett-Packard generated $4.06 billion in cash from
operations versus $2.80 billion in the previous quarter. The
company ended the quarter with $11.3 billion in cash and cash
equivalents versus $9.5 billion in the previous quarter. The
company exited the quarter with a long-term debt balance of $21.8
billion, down from $24.0 billion in the previous quarter.
Management expects first quarter fiscal 2013 non-GAAP diluted
EPS to be between 68 cents and 71 cents. GAAP diluted EPS is
projected at 34 cents to 37 cents.
For fiscal 2013, the non-GAAP diluted EPS is expected between
$3.40 and $3.60, while the GAAP diluted EPS is projected range
from $2.10 to $2.30.
Hewlett-Packard's fourth quarter 2012 earnings per share were
in line with the Zacks Consensus Estimate, but revenues declined
from the year-ago period. Results were negatively impacted by
macroeconomic factors, lower order renewal, and reduction in
business fundamentals across segments.
The company is taking major steps to revive some of its
businesses. Management is taking strategic and innovative steps
to manage costs, drive growth and also to improve the health of
its balance sheet. However, cannibalization of PC is taking a
toll on the company's business.
On the other hand, the printer business looks challenging,
given the continuous roll out of printing devices at competitive
prices by other technology giants including Samsung,
), Epson and
). Moreover, HP is expected to witness significant competition
from the likes of
HPQ has a Zacks #4 Rank, implying a Sell rating.
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