Rocky Results for HP Inc.’s First Quarter; Job Cuts ‘Accelerated’

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For its inaugural first quarter, HP Inc. reported first-quarter net revenue of $12.2 billion, down 12 percent versus the prior-year period, net earnings per share of $0.36 (above HP’s previously provided outlook of $0.27 to $0.32 per share), and net earnings of $0.7 billion, versus $0.8 billion versus the prior-year period.

HP Inc., which is devoted to printing and computing, reported that printing net revenue was down 17 percent year-over-year (down 11 percent in constant currency) with a 17.0 percent operating margin. Total hardware units were down 20 percent, with commercial hardware units down 15 percent, and consumer hardware units down 23 percent. Supplies revenue was down 14 percent (down 8 percent in constant currency).

Personal Systems net revenue was down 13  percent year-over-year (down 6 percent in constant currency), with a 3.1 percent operating margin. Commercial net revenue decreased 11 percent and consumer net revenue decreased 16 percent. Total units were down 13 percent with notebooks units down 8 percent, and desktops units down 13 percent.

“We have a clear strategy that leverages our strengths, and we are focused on execution, taking cost out of the business and delivering innovations that will amaze our customers and partners,” commented HP Inc. President and CEO Dion Weisler, “Although we have some tough quarters ahead, I am confident in the future.”

However, during a conference call with analysts yesterday, HP Inc. executives said that it’s accelerating the pace of its job cuts, and that nearly 3,000 positions will be eliminated by the end of 2016. Originally, the firm had planned to spread the layoffs across a three-year-period, with 1,200 workers being cut in 2016.

Outlook

For its second quarter, HP estimates earnings per share (EPS) to be in the range of $0.33 to $0.38.

For its complete fiscal-year 2016, HP estimates EPS to be in the range of $1.52 to $1.62.

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