P&L

After bouts of drama, HP’s turnaround is taking hold

May 22, 2013
May 22, 2013

HP-revenue-year-over-year-change_chart

The numbers: They were good. PC maker Hewlett-Packard reported a 32% decline in profit, but that still beat analyst expectations. Net revenue was also down by 10%, but the company raised the lower end of its annual forecast by $0.10 to $3.50 earnings per share.

The takeaway:  Costs fell by almost 9% in the second quarter, which helped HP’s bottom line. HP also had better than expected performance in both enterprise services (which cater to corporate customers) and its printing business. That helped offset the expected decline in the division that sells PCs, which saw a 20% drop in revenue.

What’s interesting: Considering the ongoing drama about CEO changes and other missteps at HP, investors rejoice when the company beats their low expectations. Shares rose almost 14% in after hours trading. CEO Meg Whitman deserves credit for executing on her turnaround plan. But the question remains: What to do about HP’s ailing PC business? Cost cuts only get a company so far. After that, it’s all about winning more business.

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