HP revenue falls on weak PC sales, lower demand for services
Hewlett-Packard reported a drop in revenue for the fourth straight quarter, hurt by weak PC sales and lower demand from corporates for its services.
Shares of the world's No. 2 PC maker, which also forecast full-year adjusted profit largely below estimates, fell as much as 4 percent in extended trading on Thursday.
Chief Executive Meg Whitman said the factors pressuring the PC market were expected to continue through the fourth quarter and well into the next fiscal year.
The 76-year-old company, which has struggled to adapt to mobiles and online computing, is splitting into two listed companies later this year, separating its computer and printer businesses from its faster-growing corporate hardware and services operations.
HP is nearing the end of a multi-year restructuring under Whitman, who has been cutting costs and focusing on higher-margin sales. The plan includes the elimination of about 55,000 jobs.
Chief Financial Officer Cathie Lesjak said the company expects the number of job cuts to increase by up to 5 percent by the end of October.
A relentless decline in PC sales has hurt the company hard — HP has reported a drop in quarterly sales in 15 of the last 16 quarters.
The decline in global PC sales was exacerbated in the second quarter of 2015 as customers awaited the release of Windows 10 in July.
As a result, revenue at HP's personal computer and printer businesses, its largest, fell 11.5 percent in the third quarter ended July 31.
Enterprise services division sales dropped 11 percent, while revenue at the enterprise group rose 2 percent.
For the full-year ending October, the company said it expected adjusted profit of $3.59-$3.65 per share, largely below the average analyst estimate of $3.64 per share.
Total revenue fell 8.1 percent to $25.35 billion in the third quarter, also hurt by a strong dollar.
The dollar .DXY had risen about 19.5 percent in the 12 months to the end of July against a basket of major currencies. HP gets nearly two-thirds of its revenue from outside the United States.
Excluding items, the company earned 88 cents per share.
Analysts on average had expected a profit of 85 cents per share and revenue of $25.44 billion, according to Thomson Reuters I/B/E/S.
Up to Thursday's close, the stock had dropped nearly 32 percent this year, compared with a 1.1 percent fall in the S&P 500 index .SPX.