HP reverses decline in PC sales, claims broad progress in quarter

Overall revenue was down but profit was up

HP CEO Meg Whitman

HP CEO Meg Whitman

Hewlett-Packard has returned its PC business to growth and reported better-than-expected results for the first quarter of its fiscal year.

HP's revenue was down overall, but by less than analysts had forecast, and the PC group reported its first sales growth in seven quarters.

Sales at HP's enterprise business were also up slightly, for the second consecutive quarter. Revenue from its important printer division, however, was lower.

The results, reported Thursday, will be a relief to CEO Meg Whitman, who is under pressure to get the company back on track.

"HP is in a stronger position today than we've been in quite some time," Whitman said in a statement. "The progress we're making is reflected in growth across several parts of our portfolio."

"While I would certainly not declare victory based on these results, they represent great progress," Whitman said on HP's earnings call.

Revenue for the quarter, which ended Jan. 31, was US$28.15 billion. That was down 1 percent from last year but better than the $27.19 billion that analysts had been expecting, according to a poll by Thomson Reuters.

Net income was $1.4 billion, or $0.74 a share, up from $1.2 billion, or $0.63 a share, in the same quarter a year earlier. Excluding one-time charges, HP's earnings would have been $0.90 per share, ahead of analysts' estimate of $0.84 per share.

The turnaround in HP's Personal Systems group, which sells PCs, was a surprise. Revenue was up 4 percent year over year to $8.53 billion. Sales to businesses climbed 8 percent, offsetting a drop in consumer sales.

At its enterprise division, which sells servers and network and storage gear, sales climbed 1 percent to $6.99 billion, HP said. Its printer division, which is its biggest profit engine, saw sales fall 2 percent to $5.8 billion.

HP missed the boat on tablets and smartphones and has been battling falling PC sales for years. It showed signs of improvement in the final quarter last year, so Thursday's results suggest Whitman is moving the company in the right direction.

It remains to be seen if it can maintain the growth in its PC business, however, and HP is still dealing with fallout from its botched Autonomy acquisition of a few years ago. A report in the Financial Times this week suggested that HP may have been aware of questionable sales practices at the company before HP acquired it.

James Niccolai covers data centers and general technology news for IDG News Service. Follow James on Twitter at @jniccolai. James's e-mail address is james_niccolai@idg.com

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