Today Hewlett-Packard reported its second quarter financial performance for the 2013 fiscal year, including revenue of $27.58 billion and non-GAAP earnings per share of $0.87. Analysts had predicted that HP would earn $0.81 per share on revenue of $28 billion.
HP missed its revenue expectations, but the market has yet to penalize the company. In regular trading, HP was up by just half a percent. In after-hours trading, the company is up more than 12%.
In the release, CEO Meg Whitman credited “better than expected performance in Enterprise Services and Printing” for its high EPS. As for its low revenues, HP reported that its PC revenue was down 20% year over year with a 3.2% operating margin.
More on HP’s poor PC performance:
Commercial revenue decreased 14%, and Consumer revenue declined 29%. Total units were down 21% with Desktops units down 18% and Notebooks units down 24%.
Given the massive decline in PC sales across the board, you’d be forgiven to think that HP’s stock has experienced a downward spiral lately. On the contrary, the company has risen quite a bit since its November 2012 lows (as shown in the graph below). The reason behind this growth appears to rest on the shoulders of CEO Meg Whitman, who joined the firm in late 2011.
Optimism aside, the PC market reportedly accounts for approximately 30 percent of HP’s total revenue. In other words, unless Whitman’s investments in R&D pan out soon, HP is in for yet another painful decline. Other important factors include the success of HP’s recent re-entry into the tablet market (the ElitePad and H-P Slate 7) and the company’s plan to cut thousands of jobs to lower costs.
According to the release, HP has in fact lowered its costs, but the company’s latest tablets were noticeably absent from its earnings report. In other words, the ElitePad and H-P Slate 7 have performed as poorly as everyone expected.
Image credit: Getty Images / Justin Sullivan