Hewlett-Packard (NYSE:HPQ) disclosed a 16% slide in fiscal first-quarter earnings on Thursday, but the embattled tech giant beat estimates as revenue contracted less than feared and restructuring benefits begin to take effect.
Shares of H-P soared more than 6% in after-hours action on the earnings beat as well as upbeat guidance, tacking onto a solid rally during regular trading.
The tech company said it earned $1.2 billion, or 63 cents a share, last quarter, compared with a profit of $1.5 billion, or 73 cents a share a year earlier.
Excluding one-time items, it earned 82 cents a share, down from 92 cents a share a year earlier but above the Street’s view of 71 cents.
Revenue fell 6% to $28.4 billion, compared with consensus calls from analysts for $27.8 billion. Operating margins dropped to 6.2% from 6.8%.
“While there's still a lot of work to do to generate the kind of growth we want to see, our turnaround is starting to gain traction as a result of the actions we took in 2012 to lay the foundation for HP's future,” CEO Meg Whitman said in a statement.
Whitman said the better-than-expected results were driven by “improved execution, improvement in our channel and go-to-market efforts and the impact” of a restructuring program that was unveiled in May.
Despite concerns about the economy, H-P also issued positive guidance.
Management forecasted fiscal 2013 non-GAAP EPS of $3.40 to $3.60, which compares favorably with the Street’s view of $3.32.
For the current quarter, H-P forecasted non-GAAP EPS of 80 cents to 82 cents, versus the Street’s view of 77 cents.
“Our primary focus is to deliver on the full year outlook, and I feel good about the rest of the year,” Whitman said, adding that H-P expects the benefits of the ongoing restructuring to “accelerate through fiscal 2013.”
Despite the earnings beat, H-P suffered sales declines nearly across the board.
The company's personal systems posted an 8% year-over-year drop in revenue as consumer revenue tumbled 13% and notebook units fell 14%.
H-P's printing revenue fell 5%, while its enterprise group logged a 4% contraction in sales and enterprise services revenue declined 7%.
Software revenue slipped 2% year-over-year but H-P said its financial services division posted a 1% increase in sales as net portfolio assets inched up 1%.
Shares of Palo Alto, Calif.-based H-P surged 6.43% to $18.20 in after-hours trading. The rally comes after H-P gained 2.40% during regular trading, leaving it up 20% on the year.