Hewlett-Packard's chief executive Officer Meg Whitman got a boost in her turnaround efforts last quarter as businesses snapped up technology products.
Shares of the California-based company jumped as much as 8.3% in extended trading after it reported fiscal fourth-quarter revenue and profit that topped analysts’ estimates.
Results were buoyed by corporate demand for servers, personal computers and networking equipment.
But Whitman, who was hired in 2011 to revitalise Hewlett-Packard, told analysts she is anticipating "headwinds almost across the board" in the coming year, amid weakness in some international markets.
Revenue in the quarter fell 3% from a year earlier and price cutting by rivals prevented revenue from translating into profitable growth, with operating profit margin falling 1.4 percentage points to 9%.
Hewlett-Packard said in a statement yesterday that revenue for the period ended October 31 was $29.1 billion, topping the $27.8 billion average estimate of analysts, according to data compiled by Bloomberg.
Whitman has plenty to manage in the coming financial year. She pointed to "pockets of revenue growth" from business PCs, servers and networking. Still, overall PC sales declined, as did printing, consulting services and a highly profitable line of support contracts called technology services.
More cost cutting may be ahead. Chief financial officer Cathie Lesjak said the selling environment "remains choppy and somewhat challenging" and added that she is looking for more places to trim beyond the roughly 29,000 jobs Hewlett-Packard will have eliminated by the end of the current fiscal year.
Net income was $1.41 billion, or 73 cents a share, compared with a $6.85 billion loss, or $3.49 a share, in the fourth quarter of last year. Revenue the same time last year was $29.96 billion. Cash flow from operations increased 10%.
A year ago at this time, the company disclosed an investigation into accounting fraud at its Autonomy software unit, which it had bought for $10.3 billion. Hewlett-Packard took an $8.8 billion writedown on the acquisition.
The company said that revenue in its enterprise group - which includes servers, storage and networking gear - rose 1.8% from a year earlier. There were a few other areas of growth, including commercial PCs, where revenue increased 4%. Sales declined in most other businesses, such as consumer PCs, printers, software and enterprise services.
Hewlett-Packard’s earnings report follows tepid results from enterprise computing suppliers including Cisco Systems and International Business Machines Corporation. Cisco on November 13 forecast its first quarterly sales decline in four years as the networking equipment maker cited slower spending by phone companies and large corporations.
IBM last month said it added $15 billion to its stock buyback plan after a sixth quarter of declining sales in a row.
Whitman has rewarded shareholders who held on the past few years. The company said at the October 9 analyst meeting that at least 50% of its free cash flow will be returned to shareholders via dividends and buybacks in 2014.
Whitman is trying to make the most of a technology behemoth that sells everything from PCs and home printers to the servers, networking gear and software that power corporate data centres. Hewlett-Packard is behind in mobile computing, where tastes are shifting from notebooks to tablet computers and smartphones, and is competing with healthier rivals including Apple and Samsung Electronics.
In the corporate computing market, Hewlett-Packard is squaring off against Cisco, EMC, Oracle, IBM and Dell, which last month went private in a $24.9 billion leveraged buyout by its founder. A host of enterprise computing startups are also winning a bigger chunk of companies’ spending.