This week Hewlett-Packard announced better than expected results for its fiscal first quarter earnings, reporting a total net revenue of $28.4 billion, and a profit of $1.2 billion. Even more, the company said it has managed to reduce its debt by $1 billion by making cash payments to shareholders through share repurchases and dividends over the last several quarters. Cash flow generated from operations were $2.6 billion, up 115-percent from the prior year.
But a breakdown of its divisions shows that revenue is still down across the board in year-over-year comparisons. Personal Systems revenue fell 8-percent compared to fiscal 1Q12, as the total number of shipped units were down 5-percent. Desktop sales were actually up 10-percent while notebook sales dipped 14-percent. Printing revenue was down 5-percent, the Enterprise Group down 4-percent, Enterprise Services down 7-percent, and Software down 2-percent. The only reported increase was in HP Financial Services, up 1-percent.
Still, HP CEO Meg Whitman, as well as Wall Street, seems hopeful that the company is now turning back to the positive. "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," she said.
In an earnings call following the fiscal 1Q13 report, Whitman dismissed the persistent rumors that HP may break itself apart to create more value to shareholders. These rumors began once former CEO Leo Apotheker said two years ago that HP might spin off its PC division. Whitman has repeatedly said HP will not spin off any department, and felt that she needed to refresh her stance this week.
"We have no plans to break up the company. I feel quite strongly that we are better and stronger together," Whitman said in response to a question from an analyst. She even backed up her statement by explaining why HP is committed to its personal systems business which consists of desktops, laptops, Ultrabooks, Chromebooks, workstations and even tablets.
According to Whitman, no one understands computing like HP, from the data center to the device. Security concerns are up, and HP is the best choice because it understands how to balance access and security. The future is also convergence, she said, meaning that as the complexity of the computing ecosystem goes up, HP's ability to "bring all the pieces together becomes a competitive advantage."
"It's going to take us time to get back on track, but we've made significant progress over the past year [with new hardware designs and] multiple operating systems that are going to give us the flexibility to meet a variety of customer needs," Whitman said.
She added that customers made it very "loud and clear" on August 18, 2011, when HP said it was considering a spin-off of its PC division, that they want HP to serve as a whole entity, not broken up into individual pieces. But the company will have to prove to shareholders that "together is better", unless HP wants to take Dell's route and go private.