Hewlett-Packard Co.'s earnings slipped in the latest quarter as the long-slumping technology company struggled to boosts its sales while preparing to split up its operations.
The fiscal second-quarter profit announced Thursday was still slightly better than analysts had anticipated, largely because employee layoffs and other HP cost-cutting helped offset its latest downturn in revenue. HP jettisoned about 3,900 workers in the latest quarter, putting it on track to end this year with about 55,000 fewer employees than it had in 2012.
The pleasant earnings surprise seemed to please investors as HP's stock added 50 cents to $34.33 in extended trading. Even with that gain, the shares have still fallen by 14% so far this year.
The Palo Alto, Calif.-based company earned $1 billion, or 55 cents per share, down 21% from $1.3 billion, or 66 cents, a year earlier.
If not for one-time costs and certain other accounting items, HP said it would have earned 87 cents per share. That figure was a penny above the projections of analysts surveyed by Zacks Investment Research.
Revenue totaled $24.45 billion — about $340 million below analysts' predictions, according to Zacks. HP's sales dropped in all of its major product categories.
For the current quarter, HP expects its adjusted per-share earnings to range from 83 cents to 87 cents. Analysts polled by FactSet had forecast adjusted earnings of 87 cents per share.
"Slowly but surely, HP is tackling its challenges," HP CEO Meg Whitman told analysts.
As part of Whitman's turnaround efforts, HP is planning to break up its operations into two separate companies before November.
One company, to be called HP Inc., will focus on personal computers and printers — an area of technology that has been hard hit by the shift to smartphones and tablets over the past five years. The other company, to be named Hewlett Packard Enterprises, will sell servers, storage products, software and consulting services to businesses and government agencies.
By dividing things up, Whitman is betting that the two companies will be able to do a better job selling their vastly different product lines and react more quickly to new trends in technology. Whitman will run Hewlett Packard Enterprises while Dion Weisler will be CEO of HP Inc.