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Hewlett-Packard shares were on the rise Wednesday in after-hours trading after the computer giant beat financial analysts' earnings expectations for its second fiscal quarter, helped in part by better-than-expected performances from its enterprise services and printing businesses.
HP shares were up $2.90, or more than 13 percent, in early after-hours trading to $24.13 after the $120 billion Palo Alto, Calif.-based computer giant, for the quarter ended April 30, posted non-GAAP diluted earnings per share of 87 cents per share, well above the Wall Street consensus of about 81 cent per share.
Shares of HP had closed at $21.23, up 12 cents or 0.57 percent ahead of the release of its financial results.
Sales for the quarter were $27.6 billion, off slightly from the $28.1 billion Wall Street consensus, and off 10 percent compared with the same period one year ago when HP posted $28.35 billion in sales.
HP CEO Meg Whitman said the earnings upside was driven by better-than-expected performance in enterprise services and printing "coupled with the accelerated capture of restructuring savings and improvement in our operations."
"I am encouraged by our performance in the second quarter, and I feel good about the rest of the year," said Whitman in a prepared statement issued ahead of the company's conference call with financial analysts. "As I have said many times before, this is a multi-year journey. We have a long way to go, but we are on track to deliver on our fiscal 2013 non-GAAP diluted earnings per share outlook."
Brandon Harris, vice president of HP solutions for New York-based Logicalis, Inc., one of HP's top enterprise partners, said he sees the HP turnaround taking hold as a result of Whitman's leadership.
"I feel very good about HP right now," he said. "Before [Whitman] came on board, HP was at a low point. This is the best I have felt about HP in five years. Meg is executing on the plan she laid out. She is doing what she said she was going to do."
Despite the better than expected earnings, HP's hardware business remains under pressure with the company's personal systems sales, which dropped to $7.58 billion down 20 percent compared to $9.47 billion in the year ago quarter. Total hardware units in personal systems were down 21 percent with desktop units down 18 percent and notebook units down 24 percent.
What's more, HP's Enterprise Group sales dropped to $6.81 billion, down 10 percent compared to $7.55 billion the year ago quarter with business critical systems sales down 37 percent and industry standard server sales down 12 percent compared to the year ago quarter.
HP's enterprise services business was also under pressure, dipping to $6 billion with sales declining 8 percent compared to the year-ago quarter's $6.49 billion. HP said application and business services revenue was down 10 percent year-over-year, while outsourcing sales were down 6 percent compared to the year ago quarter.