Hewlett-Packard ( HPQ ) is the last of the big tech companies to report earnings this season. HP's fiscal Q3 earnings of 89 cents (non-GAAP) was in line with the Zacks Consensus Estimate, and revenues for the quarter of $27.6 billion beat our estimate of $27.0 billion. This marks the first year-over-year revenue increase for Hewlett-Packard in quite some time.
Zacks ESP predicted the earnings meet, but the results for this behemoth of PCs, printers, software and services are fairly typical. Over the past four quarters, HP has an average positive earnings surprise of just under 2%. Guidance for fiscal Q4 (ending October) of $1.03-1.07 per share in in the mid-range of Zacks' expectations, while $3.71-3.74 guidance for the full year 2014 puts the Zacks consensus on the low end.
Because HP had gone through turbulent times only a few years ago -- and for an extended period of time before that, with brash announcements about the direction of the company from Leo Apotheker, etc. -- perhaps this slow and steady method will keep investors' minds at ease. Improvements made in HP's core businesses since Meg Whitman became CEO in 2011 have helped HPQ shares gain 32% in the past year. The company is still down 20% over the past five years, but Rome, as they say, wasn't built in a day.
For Whitman's part, she announced she is "pleased with the progress" the company has made, even if Printing remains a tough business with several weaknesses industry-wide and Enterprise Services still leaves room for improvement. The Enterprise Group saw a pop in the quarter, however; it will be interesting to hear on the conference call if the sale of IBM's ( IBM ) server business to Lenovo has allowed HP to take market share here.
Hewlett-Packard's cash flow of $3.6 billion looks impressive, especially considering it represents a 36% year-over-year gain, so perhaps continuing to modernize the "old" model of PCs and and printers might be attained by putting some of this cash to use. Personal Systems and Enterprise Group were up 12% and 2%, respectively, while all other businesses were down single digits year over year.
The company also returned $881 million to shareholders via share repurchases and dividends in the quarter. HPQ stock, while down a tad in the after-market, remains near multi-year highs.
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