Hewlett-Packard (NYSE:HPQ), the largest manufacturer of personal computers in the world, forecast for the first three months of this year a net profit of $1.08 billion, down 32% from $1.59 billion in the previous quarter, but estimates provided by the company topped analysts’ expectations. HP revenue for January-March, the second quarter of fiscal year 2012-2013, fell by 10%, to $27.6 billion, slightly below analysts’ average forecast, according to Bloomberg.
HP anticipates an adjusted profit of 84-87 cents per share for the next fiscal quarter, which would exceed analysts’ estimates. Shares were up 14% in extended trading session on Wednesday in New York.
The company runs a recovery program that involves restructuring of 29,000 jobs by the end of fiscal year 2013-2014, in order to reduce costs by up to $3.5 billion per year and strengthen its profitability due to lower demand for PCs. The chief executive officer of HP, Meg Whitman, has managed to decrease costs by 8.8% and increased profit margin of printing equipment division, but sales are still weak.
HP shares rose by 49% since the beginning of this year, compared to a gain of 16% for the Standard & Poor’s 500 index of the New York stock exchange.
Sales of PCs dropped 20% in the first quarter to $7.58 billion. At the same time, the PC market fell by 14% at a global level, the steepest decline since 1994, according to IDC. The U.S. group Dell, which is preparing to delist from the stock exchange in a deal worth $24.4 billion, lowered PC prices aggressively to win market share. Dell gained ground against HP on the server segment.
“You saw one of our competitors, Dell, completely crater their earnings. Maybe that’s what you do when you go private. We’re here to set this company up for the long term, not just get through this year,” said Whitman adding that HP would not get into a pricing war with Dell.
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