Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hewlett-Packard Company (HPQ): Is This Earnings Rally Justified?

Page 1 of 2

In my recent articles I have discussed the predicament of Hewlett Packard Company (NYSE:HPQ). The company has gone from being the biggest printer and PC manufacturer to one of the most disliked companies in the stock market. This ‘fall’ is due to a number of factors, but the rise of handheld devices is one of the primary reason behind the troubles of HP. The increased usage of smartphones and tablets has affected both the printing and PC industry. The recent PC figures by Gartner are not a good sign for the future of the PC industry, but there is hope that Ultrabooks can rescue the falling sales. If there is any possibility of this turnaround, Microsoft Corporation (NASDAQ:MSFT)’s Windows 8 will have to play a major role.

Hewlett-Packard Company (NYSE:HPQ)Earnings

HP reported its 1QFY13 results last week. The market was expecting HP to report an EPS of $0.71 on revenues of $27.8 billion. The company comprehensively beat estimates by reporting a non-GAAP EPS of $0.81 and revenues of $28.4 billion. The healthy growth resulted in stock appreciation of 6.4% in aftermarket trading. The stock has depreciated approximately 40% in the last year, and despite stellar earnings it will have to do a lot more to restore investor confidence. Positives from the quarterly report include the stabilizing revenues from printer, improved cash position and better than expected Enterprise performance, with the decline limited at 4% y/y.

Net income saw a decline of approx. 16% y/y to 1.23 billion from $1.47 billion. This decline was fueled by declining margins and declining sales in the PC and printer business. During the quarter there was a revenue decline across all segments, with only the networking segment showing a meager 4% growth. This decline was the steepest in the PC segment with 8% followed closely at 5% by the printing segment. The cost cutting plan at HP is finally taking shape with the company planning to lay off another 29,000 employees in the next two years. Almost 15,000 employees have already left the struggling giant, which has been one of the reasons behind improving margins.

The misguided acquisition has left question marks on the once formidable cash hoard of HP. The street has been worried about the company being able to finance its turnaround efforts. The current quarter sheds a hopeful light on the cash position with the company reporting FCF of $2.06 billion, or $1.05/share. According to the sell side, the cash situation benefited from better receivables and $127 million in sales of PP&E.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!