Hewlett-Packard Company (HPQ) reported second quarter 2012 earnings per share (EPS) of 98 cents, beating the Zacks Consensus Estimate of 91 cents. Also, the quarter’s result came above the company’s guidance range of 88 cents to 91 cents. Despite a weak year-over-year comparison, shares jumped roughly 11.0% in the after-hours. Apart from the guidance beat, the main driver of the shares remained the news of a major restructuring as announced by the H-P chief Meg Whitman. Per the announcement, H-P will reduce its headcount by 27,000 through 2014 and save costs of $3.0-$3.5 billion annually.
Revenues
Revenues declined 3.0% year over year to $30.7 billion, attributed mainly to lackluster performance from PSG, IPG and ESSN segments. Presently, the company is trying to normalize excess channel inventory in the PSG and ESSN segments that was piled up for a hard disk drive supply disruption.
Region wise, revenue in Americas was $13.8 billion, flat year over year. EMEA revenue declined 7.0% year over year to $10.9 billion, while revenue from the Asia Pacific revenue inched down 1.0% year over year to $6 billion. The company faces continued macroeconomic challenges in EMEA while the Chinese business improved compared to the year ago period.
Segment Results
Enterprise Servers, Storage & Networking(:ESSN)reported revenues of $5.2 billion, down 5.5% from $5.5 billion in the year-ago quarter. The revenue of this segment was mainly affected by the hard disk drive shortages.
Personal Systems Group(:PSG) revenues were $9.45 billion, down 0.4% year over year. Within this segment, the company witnessed a recovery in the desktop and the commercial segment, but consumer notebook demand remained typically soft.
Imaging and Printing Group (IPG) revenues were $6.1 billion, down 10.0% year over year. Commercial hardware revenue dipped 3.7% on a year-over-year basis. Consumer hardware revenue was down 14.7% from the year-ago quarter.
HP Financial Services(:HPFS) revenues were $968.0 million, up 9.4% year over year. This was driven by an 8.0% increase in net portfolio assets and flat financing volume.
Operating Results
Gross margin in the quarter stood at 23.1% compared with 24.7% in the year-ago quarter. Gross margin was impacted by the strong yen, lower mix of supply, continued margin pressure in services and competitive pricing in its hardware businesses.
Diluted earnings per share on a GAAP basis were 80 cents in the reported quarter compared with $1.05 in the prior-year quarter. After adjusting for special items, non-GAAP net earnings per share were 98 cents compared with $1.24 in the prior-year quarter.