H-P Lifts 2Q Profit Despite Weaker Sales, Unveils More Job Cuts

Hewlett-Packard (NYSE:HPQ) lifted its second-quarter profit by 18% to match Wall Street expectations, although revenue continued to decline and the tech giant unveiled plans to eliminate more positions than expected.

Shares fell 2.3% to $31.78 on Thursday after the earnings report was released early. H-P was due to report earnings after the bell. The stock dropped another 1% in after-hours trading.

H-P earned $1.27 billion, or 66 cents a share, compared to a year-ago profit of $1.08 billion, or 55 cents a share. Excluding one-time items, adjusted per-share earnings rose a penny to 88 cents.

Revenue was down about 1% at $27.3 billion, missing the consensus estimate for $27.41 billion.

Computer makers like H-P have struggled to combat declining demand for PCs and weaker hardware margins. Unlike some of its rivals, H-P chose to focus on turning around its computer business. CEO Meg Whitman scrapped a plan developed by her predecessor, Leo Apotheker, to spin off H-P’s PC unit.

In the period ended April 30, personal systems revenue climbed 7% year-over-year. The segment logged an operating margin of 3.5%. Total units were up 10%, with desktops and notebooks each up 6%.

Revenue generated from software sales remained flat. Printing revenue fell 4%, while H-P’s enterprise segment saw a 2% drop. Enterprise services revenue was down 7%.

The Palo Alto, Calif.-based company said it booked $3 billion in cash flow, a 16% decline.

H-P disclosed more job cuts under a multi-year restructuring plan announced in 2012. The company expects to eliminate 11,000 to 16,000 more positions than previously planned. H-P had provided an estimate for 34,000 cuts.

In a statement, Whitman said H-P’s turnaround remains on track.

“With each passing quarter, HP is improving its systems, structures and core go-to-market capabilities,” Whitman said. “We’re gradually shaping HP into a more nimble, lower-cost, more customer- and partner-centric company that can successfully compete across a rapidly changing IT landscape.”

H-P forecast third-quarter earnings of 86 cents to 90 cents a share on an adjusted basis. Analysts are projecting 89 cents.

For the full year, H-P expects to post adjusted earnings of $3.63 to $3.75, bookending a consensus estimate of $3.71.