Hewlett-Packard’s (HPQ) streak of consecutive quarters with declining revenue now stands at seven straight, most of which have occurred on current chief executive Meg Whitman’s watch. With a 10 percent sales slide in its just concluded Q2 2013, it's the deepest drop yet in the vendor’s nearly two-year long slump.
Aside from HP’s well-chronicled bungles that have stripped it of profits and significantly pared the company’s valuation, where HP intends to turn to move the battleship northward still isn't clear.
- Will the company continue to pursue its better-mousetrap hardware strategy in the face of falling sales?
- Will it stick with eroding PC revenue and flagging services and software numbers?
- Ultimately, where’s the hook HP is promising to provide upon which customers and channel partners can hang their hats?
- Most importantly, will Whitman's turnaround strategy work?
Silver Lining: Beating Wall Street's Expectations
Overall, the beleaguered Silicon Valley stalwart posted $27.6 billion in revenue for the quarter, a 10 percent fall year-over-year, and $1.1 billion in net earnings, a 32 percent slide from the year earlier period. Second quarter earnings per share slid to $0.55, down 31 percent from last year.
That HP’s results beat Wall Street and its own earnings estimates is one way to look at its quarterly performance, albeit one that Whitman latched onto in a statement, expressing optimism although she appeared to have to look far for supporting evidence—networking and software support were the only two HP business segment to record upticks in year-over-year revenue.
"We beat the upper end of our non-GAAP diluted EPS outlook for the quarter by $0.05 per share, driven by better than expected performance in Enterprise Services and Printing, coupled with the accelerated capture of restructuring savings and improvement in our operations," she said. And, in an earnings conference call, Whitman said that the feeling around HP is the company’s strategy and tactics to right the bobbing ship are coming to fruition.
‘‘You can feel the turnaround taking hold at HP,’’ she said.
HP's Business By Business Performance
Here’s a lineup of HP’s Q2 2013 performance...
- Overall PC revenue fell 20 percent year-over-year.
- Commercial PC revenue fell 14 percent, consumer sales were down 29 percent.
- Unit shipments for desktop fell 21 percent and notebooks dropped by 24 percent.
- Overall printer sales slid 1 percent year-over-year with total unit sales down 11 percent.
- Commercial printer sales fell by 5 percent and consumer revenue by 13 percent year- over- year.
Networking, servers, storage
- Enterprise revenue declined 10 percent.
- Networking revenue gained 1 percent.
- Industry standard server revenue was down 12 percent.
- Business critical systems revenue was down 37 percent. Storage revenue was down 13 percent.
- Technology Services revenue was down 3 percent.
- Overall sales declined 8 percent overall.
- Application and business services revenue was down 10 percent.
- IT Outsourcing revenue fell 6 percent.
- Overall sales fell 3 percent.
- Software revenue was down 3 percent.
- Support revenue was up 12 percent.
- License revenue was down 23 percent.
- Services revenue was down 5 percent.
HP Financial Services
- Overall revenue fell 9 percent.
- Net portfolio assets slid 3 percent with a 24 percent decrease in financing volume.
Whitman’s contention all along has been that fixing HP is a matter of putting its priorities in order and executing on that strategy better than her predecessors. So far, no one has publicly questioned her plan, giving her plenty of leeway in the process. But maybe now is the proper time to begin asking if she can effect a true turnaround at HP.