Hewlett-Packard Posts 9 Percent Sales Drop In Final Quarter As Combined Company

With PC and printing sales down 14 percent, Hewlett-Packard reported a 9 percent sales drop, to $25.7 billion, in its last quarter as a combined company, compared with $26.4 billion in the year-ago quarter.

HP said the non-GAAP diluted earnings of 93 cents per share for the quarter ended Oct. 31 were within the previously provided outlook of 92 to 98 cents per share. The Wall Street consensus was 97 cents per share, according to Thomson Reuters.

Hewlett-Packard's Enterprise Services sales were down 9 percent in the quarter, while HP Enterprise Group product sales were up 2 percent.

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After the earnings report, HP Inc. shares were down 5 percent, or 76 cents, in after-hours trading, to $13.88, while Hewlett Packard Enterprise shares were up 3 percent, or 38 cents, to $14.07.

Hewlett Packard Enterprise CEO Meg Whitman reaffirmed the fiscal 2016 outlook for the new enterprise-focused business, saying the company was off to a "very strong start."

"The new company's business segments delivered a second consecutive quarter of constant-currency revenue growth in Q4, and we believe that momentum will accelerate into FY16," said Whitman.

For all of the Hewlett Packard Enterprise segments, sales were $14.1 billion, down 4 percent compared with the same quarter one year ago.

Storage sales were down 7 percent and business-critical-system sales declined 8 percent in the quarter. Networking sales, a bright spot for Hewlett Packard Enterprise -- after the acquisition of Aruba Networks in May -- were up 35 percent in the quarter.

HP's Enterprise Services business posted sales of $5 billion, down 9 percent, with an 11 percent drop in technology outsourcing sales.

The CEO for a large Hewlett Packard Enterprise and HP Inc. partner, who did not want to be identified, said he is optimistic about the prospects for both businesses to drive sales growth as more agile, nimble companies.

"I believe both businesses will do better on their own," said the CEO. "I expect to start to see positive benefits from the separation in the new fiscal year. They spent a lot of energy splitting up. That [energy] is now going to be spent driving the business forward."

As for the 14 percent quarterly drop in PC and printing sales, the partner CEO said he expects the new HP Inc. to grab share from competitors in both of those markets. "I came away from the HP Inc. launch very optimistic," he said. "They are doing a lot of good things."

Whitman, for her part, said the separation was executed without any disruption of business. "Each company has a clear, well-defined strategy and is well-positioned to win," she said.