HPQ HP Inc

   (FROM THE WALL STREET JOURNAL 2/25/16) 
   By Don Clark 

HP Inc. met Wall Street's modest expectations in its first quarter as an independent company, despite signs that weak conditions in printing and personal computers aren't improving quickly.

The Palo Alto, Calif., company said earnings from continuing operations declined 16% in the first fiscal quarter ended in January, while revenue fell 12% from the year-earlier period.

HP projected profit for the current quarter with a midpoint slightly lower than analysts estimated, while reaffirming the company's guidance for the full year.

"What I'm most pleased about is we delivered on our plan," Dion Weisler, HP's chief executive, said in an interview.

HP's stock gained a penny in after-hours trading after rising 50 cents to $10.81 at 4 p.m. in New York trading. It released results after 4 p.m.

Mr. Weisler has cautioned that printers and PCs face a series of headwinds that won't go away soon.

In printing, which accounts for about 80% of the company's profits, sales of both hardware and ink have been hurt by changing habits of computer users and competition -- particularly rivals in Japan whose products have gained a pricing edge on currency shifts.

In the first quarter, HP said total printing revenue declined 17%. Its revenue from ink and other supplies was down 14% and hardware unit sales were off 20%.

In PCs, HP and rivals continue to suffer from a gradual slide in demand since spending began shifting to smartphones and tablets several years ago.

The company, the No. 2 player in the market behind Lenovo Group Ltd., said its PC revenue declined 13% in the quarter.

HP said the strong U.S. dollar was a big factor in its results. On a constant currency basis, the company said total revenue was off only 5%.

Mr. Weisler joined HP in 2012 after stints at rivals Lenovo and Acer Inc. He said HP has gained market share in PCs used by companies, while walking away from "low-calorie" sales that don't generate much profit because of low pricing.

More broadly, he argues HP can return to growth with the aid of innovative products. One attempt emerged this week when the company introduced its Elite X3, a big-screen smartphone that can be plugged into a cradle and connected to a keyboard and display to act like a PC.

Other new initiatives include a move into 3-D printing and machines used to print large signs for advertising, Mr. Weisler said. He predicted that HP's business in ink and other printing supplies should stabilize by the end of 2017.

HP's net income reflects the divestiture of the business-oriented operations that now constitute Hewlett Packard Enterprise Co., a separate publicly held company. Profit on that basis for the period ended Jan. 31 came to $592 million, or 33 cents a share, down sharply from the year-earlier figure of $1.37 billion, or 73 cents a share.

Revenue declined to $12.25 billion from $13.86 billion. The company hadn't previously provided figures for the year-earlier period.

For the second fiscal quarter ending in April, HP estimated adjusted per-share earnings of between 35 cents and 40 cents a share. Average analysts estimates were 39 cents per share. The company didn't project revenue.

HP Enterprise, the second public company formed by the breakup of the former Hewlett-Packard, is due to report its first quarterly results on March 3.

(END) Dow Jones Newswires

February 25, 2016 02:48 ET (07:48 GMT)

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