updated 04:52 pm EDT, Wed August 21, 2013
Wallstreet unimpressed, no significant raise in after-hours trading
PC manufacturer HP today announced financial results for its third fiscal quarter, which ended on July 31. Third quarter earnings per share (EPS) came in at $0.71, up from a loss per share of $4.49 in the same quarter a year ago-- and above its own previously-provided outlook of $0.56 to $0.59 per share. For the third quarter, net revenue of $27.2 billion was down eight percent year-over-year, and down seven percent when adjusted for the effects of currency.
"We once again achieved the financial performance we said we would, delivering $0.86 in non-GAAP diluted earnings per share, within our previously provided outlook of $0.84 to $0.87," said President and CEO Meg Whitman. "I remain confident that we are making progress in our turnaround. We are already seeing significant improvement in our operations, we are successfully rebuilding our balance sheet. Our cost structure is more closely aligned with our revenue and we have reignited innovation at HP, with a focus on the customer."
HP generated $2.7 billion in cash flow from operations in the third quarter, down six percent from the prior-year period. Inventory ended the quarter at $6.5 billion, down one day year-over-year to 28 days. Accounts receivable ended the quarter at $14.3 billion, down one day year-ove-year to 47 days. Accounts payable ended the quarter at $13.3 billion, up seven days year-over-year to 57 days.
HP's dividend payment of $0.1452 per share in the third quarter resulted in cash usage of $280 million. HP also utilized $3 million of cash during the quarter to repurchase approximately 168,000 shares of common stock in the open market. HP exited the quarter with $13.7 billion in gross cash.
Personal Systems revenue was down 11 percent year over year, with a three percent operating margin. Commercial revenue decreased three percent, and consumer revenue declined 22 percent. Total units were down eight percent with desktops units down nine percent and notebooks units down 14 percent.
Printing revenue declined four percent year-over-year, with a 15.6 percent operating margin. Total hardware units were up five percent, with commercial hardware units up 12 percent and consumer hardware units up two percent. Supplies revenue was down four percent.
Enterprise Group revenue declined nine percent year over year with a 15.2 percent operating margin. Networking revenue was flat, Industry Standard Servers revenue was down 11 percent, Business Critical Systems revenue was down 26 percent, Storage revenue was down 10 percent and Technology Services revenue was down seven percent.
Enterprise Services revenue declined nine percent year over year with a 3.3 percent operating margin. Application and Business Services revenue was down 11 percent and Infrastructure Technology Outsourcing revenue declined seven percent.
Software revenue was up one percent year-over-year, with a 20.5 percent operating margin. Support revenue was up four percent, license revenue was flat, professional services revenue was down 11 percent and SaaS revenue was up four percent.
HP Financial Services revenue was down six percent year-over-year, with a four percent decrease in net portfolio assets and a nine percent decrease in financing volume. The business delivered an operating margin of 11.3 percent.