HP Tops Forecast but Gets a Drubbing Anyway

Hewlett-Packard had a relatively strong first quarter for its 2011 fiscal year, which ended Jan. 31, but investors appeared dissatisfied with the outlook going forward, punishing the stock in after-hours trading after it announced quarterly figures on Tuesday.

HP (NYSE: HPQ) brought in $32.3 billion for the quarter, up 4 percent from the same period last year, with diluted, non-GAAP earnings per share (EPS) of $1.36, a jump of 27 percent from last year’s quarter, the company said.

“Going forward, we have the opportunity to further capitalize on our customers’ demands for higher value-added solutions,” HP President and CEO Léo Apotheker said in a statement. “HP has a powerful portfolio, including exciting, recently announced cloud and connectivity offerings. We are focused on leveraging these strengths to extend our leadership and accelerate growth.”

Analysts polled by Thomson Reuters in advance of the announcement had expected HP to bring in $32.95 billion in revenues, a growth of 5.7 percent over the same quarter last year, and EPS of $1.29. A year ago, the company’s EPS were $1.07.

Non-GAAP accounting excludes after-tax costs of $0.19 per share in the first quarter of fiscal 2011, while the same period last year excluded $0.14 per share. Those costs were mostly due to “amortization of purchased intangibles, restructuring charges and acquisition-related charges,” the company said.

As far as guidance going forward, for the entirety of fiscal 2011, HP executives expect to bring in between $130 billion and $131.5 billion and Non-GAAP EPS of between $5.20 and $5.28.

Meanwhile, for the current quarter ending April 30, HP said it anticipates the company will gross some $31.4 billion to $31.6 billion, and yield non-GAAP EPS of between $1.19 and $1.21.

One apparent disappointment for investors was a decline in revenues for HP’s Personal Systems Group (PSG) — the company’s PC division and its second top grosser, behind HP’s Enterprise Business. Last year’s first quarter saw PSG bring in $10.6 billion as opposed to the latest quarter, which dropped to $10.5 billion.

While the company experienced a slowing of sales to consumers, though, it saw continued strong sales to corporations.

“I believe we’re about halfway through the [corporate] refresh,” Apotheker said.

However, Apotheker didn’t mince words when it came to weak spots in HP’s performance.

“Clearly there is more to be done,” he said on a conference call after the markets closed, although he didn’t give specifics.

HP was down nearly 13 percent, a loss of more than $6.00, to $42.40 in after-hours trading.

Stuart J. Johnston is a contributing writer at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.

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