Hewlett-Packard’s first-quarter revenue fell 4.7% because of declines in its enterprise software business and flat PC sales. Shares of HP, which plans to split into two companies later this year, took a beating in after-hours trading. Here are the key points of Tuesday’s quarterly earnings report.
What you need to know: HP’s first-quarter revenue of $26.8 billion was down from the $28.2 billion the company posted during the same period last year. The tech giant’s sales came up short of the $27.4 billion that analysts had expected, according to Thomson Reuters. HP’s profits fell nearly 4% to $1.4 billion, or 75 cents per share.
HP said it overcame problems from the strengthening U.S. Dollar overseas in the most recent quarter, adding that its first-quarter revenue was down just 2% when exchange rate fluctuations were taken into consideration. But the company also offered a disappointing forecast for the current quarter, warning that currency changes could have “a significant impact” on those upcoming results.
HP’s shares (HPQ) fell nearly 7% in after-hours trading following the disappointing earnings report. The company’s stock price is up just 2% since November, when HP reported a fourth-quarter sales decline after its first quarterly sales gain — during the third quarter — in roughly four years.
The big number: Sales for HP’s business services unit fell 11% in the fourth quarter, to $4.9 billion, which contributed to the company’s disappointing performance overall. Meanwhile, sales were flat for both the PC business and its Enterprise Group, which includes cloud computing.
Sales in HP’s desktop PC business, which accounts for about 30% total revenue, declined 10% after showing some improvement in 2014. Sales of laptops improved 9% to make up the bulk of that business.
Overall, the PC and printing businesses saw sales decline 1.8%, to $14.1 billion. HP said in September the PC and printing businesses would split off into one company while its corporate hardware and services businesses would go into another.
What you might have missed: Many analysts hope that HP’s earnings call with CEO Meg Whitman Tuesday evening will provide more details about the pending split — including how, exactly, the company plans to divvy up its cash and debt between the two new companies. HP did include $80 million in separation costs in its first-quarter earnings report, as well as another $146 million in restructuring charges.
Whitman also said in a statement that her ongoing turnaround plan for HP, which she has said will be completed by 2016, “remains on track.”