HP Whiffs on PCs, Software, Services in Last Quarterly Report Before November Split

Hewlett-Packard’s (HPQ) disappointing FQ3 2015 results, admittedly executed against a headwind of declining PC demand and curtailed corporate buying, nonetheless left a sour taste only weeks ahead ahead of the vendor’s split into a PC/printer operation and an enterprise businesses.

HP’s sales have fallen in 15 of the vendor’s past 16 quarters and this period was no different as sales slid 8.1 percent from last year to $25.3 billion, slightly below analysts’ expectations. Net income for the quarter slipped 13 percent from last year to $854 million. GAAP per share earnings came in at $0.47, well below the $0.50 to $0.54 a share prior outlook.

“In Personal Systems and Printing, market declines and competitive pricing pressures have accelerated since May,” said Meg Whitman, HP chairman, president and chief executive on an earnings call. “While Dion [Weisler] and his team are aggressively managing costs and gaining share in key focus areas, we now see a difficult business environment for at least several quarters to come,” she said.

Whitman’s tone was more upbeat concerning HP’s enterprise division.

“We’re seeing the benefits of the work we’ve done over the past several years to strengthen the product strategy and go-to-market execution for the Enterprise Group,” she said.

For the quarter, sales declined in five of HP’s six business segments, with the Enterprise Group’s 2 percent uptick in revenue the only bright spot. By comparison, for FQ3 PC sales fell 13 percent to $7.5 billion, printers dipped 9 percent to $5.1 billion, Enterprise Services slid 11 percent to $4.9 billion, Software tumbled 6 percent to $900 million and Financial Services declined 6 percent to $806 million.

“We did face a challenging macroeconomic and IT spending environment in the third quarter, with soft consumer spending, continued weakness in Russia and China, and stock market volatility driving uncertainty,” Whitman said.

Don’t be surprised if in the wake of HP’s split the vendor adds to its previously stated 2012 plan to layoff a total of 55,000 people. Some 3,900 people exited the company in FQ3, said Cathie Lesjak, HP chief financial officer, on the earnings call.

By the end of Q4, HP could add another 5 percent to its prior total job loss estimate, she said.

HP pared its full year EPS outlook to $3.59 to $3.65 a share from the prior guidance it issued last May of $3.53 to $3.73 a share.

“The next several quarters we think are going to be pretty tough,” Whitman said.