HP raises 2013 outlook as Whitman's plan takes hold

Wed May 22, 2013 6:53pm EDT
 
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By Poornima Gupta

SAN FRANCISCO (Reuters) - Hewlett-Packard Co raised its 2013 earnings outlook after quarterly results beat low expectations, as CEO Meg Whitman's turnaround plan helped offset shrinking personal computer sales with enterprise computing services.

While fiscal second-quarter profit plummeted 32 percent, Wall Street had braced for worse. HP shares gained 14 percent after the company projected full-year earnings per share of $3.50 to $3.60, raising the lower end by 10 cents, and fiscal third-quarter profit that topped analyst estimates.

Whitman, who took the helm at the world's largest PC maker more than a year ago, is orchestrating a turnaround, trying to recapture some of the Silicon Valley icon's former strong growth. She has said the process could take years.

HP received a warmer welcome from investors for its results than smaller rival Dell Inc, which last week reported a 79 percent slide in profit and is now mired in a takeover battle between founder Michael Dell and activist investor Carl Icahn.

"This is another good deposit on the road to our turnaround here," HP Chief Financial Officer Cathie Lesjak said in an interview. "We are roughly where we want to be in total on the company."

Enterprise services and printing units are "probably a little bit ahead," she said, adding the two businesses helped drive the company's gross margin improvement during the quarter.

HP's net income fell to $1.08 billion, or 55 cents a share, from $1.59 billion, or 80 cents a share, a year earlier.

The company earned 87 cents per share on an operating basis during the second quarter on revenue of $27.6 billion.   Continued...

 
A Hewlett-Packard logo is seen at the company's Executive Briefing Center in Palo Alto, California January 16, 2013. REUTERS/Stephen Lam