HP Posts Q2 Sales Drop, Names Execs To New Roles As It Preps For Split

Hewlett-Packard Thursday posted better than expected earnings for its second fiscal quarter even as sales growth remained elusive.

The computer giant also pushed ahead with preparations to split into two independent companies, disclosing several executive appointments for the new entities.

The Palo Alto, Calif.-based company reported non-GAAP diluted net earnings of $1.6 billion, or 87 cents per share, for its second fiscal quarter, ended April 30, compared to $1.69 billion, or 88 cents per share in the same quarter a year ago.

Sales for the quarter dropped to $25.45 billion, down 7 percent from $27.31 billion in the year-ago quarter.

The Wall Street consensus was for earnings per share of 85 cents on a 6 percent decline in sales to $25.65 billion, according to Thomson Reuters.

HP shares were up two percent or 64 cents to $34.47 in after-hours trading.

HP posted a 16 percent drop in enterprise services sales; an 8 percent drop in software sales; a 7 percent drop in printing sales; a 5 percent decline in personal systems sales and a 1 percent drop in Enterprise Group sales.

Among the biggest sales drops in the quarter was a 16 percent drop in networking sales and a 15 percent decline in business critical systems sales.

Kelly Ireland, founder and CEO of Orange Calif. based CB Technologies, an HP Platinum partner doing business with both HP's enterprise and PC business, said her company has made a big investment in new HP technologies including Moonshot, HP's Helion cloud business and HP software, but "progress has been slower than expected."

"We're looking forward to the payback as HP splits into two new companies," said Ireland. Over the last several years, CB Technologies has added a dozen employees in a bid to double its HP business over the next year.

HP CEO Meg Whitman said the computer giant's plan to split into two new Fortune 50 companies, a $57.6 billion enterprise computing company known as Hewlett-Packard Enterprise and a $57.3 billion printing and PC business known as HP Inc., as of Nov. 1 remains on track.

In fact, HP announced new appointments as it gets set for the split, moving highly regarded CFO Cathie Lesjak to the chief financial officer post for HP Inc.

Tim Stonesifer, who is currently acting as CFO for HP's Enterprise Group, will become CFO of Hewlett-Packard Enterprise.

Chris Hsu, a former managing director for private equity company KKR who joined HP a year ago, has been selected to become Chief Operating Officer at Hewlett-Packard Enterprise.

"I'm pleased with where we ended the quarter, the continued success of our turnaround, and the progress we're making on separation," said HP CEO Meg Whitman in a statement. "Despite some tough challenges, we executed well across many parts of our portfolio, sustained our commitment to innovation, and delivered the results we said we would. HP is becoming stronger as we head into the second half of our fiscal year and separation in November."

PUBLISHED MAY 21, 2015