HP's Whitman, Lesjak Discuss Q1 on Earnings Conference Call

Below are some highlights from Hewlett-Packard HPQ first-quarter earnings conference call: Meg Whitman: President & CEO

HP is in a stronger position now than it has been before.
Innovation has been reignited which will revolutionize many of HP's products in the coming year.
HP was recently recognized as the leader in private cloud solutions.
Personal systems group introduced two new phablets in India in Q1.
PC market contraction is slowing particularly in the commercial segment.
Turnarounds are not linear though, there is a lot of work left to do.
Focus on innovation, cash flow, restructuring, executing on the turnaround, and paying attention to the reality of the world of IT.

Cathie Lesjak: CFO

Remain focused on improving cost structure.
R&D expense has increased over the year due to investment in innovation.
Printing continues to perform well with good profitability and unit shipment grew by 5%.
Demand for ink in office products remain strong and there was double-digit unit and revenue growth in ink advantage.
Completed a successful debt offering in q1; first in 2 years.
Commercial sales grew 8%.
Double-digit growth in cloud.
Pressure from declines of volume in previous quarters lowered HP financial services revenues.
Still committed to earlier stated cash distribution for the year.
Focused on optimizing cost structure, better segmenting the market, and aligning segments together.
Plan to increase our re-investment in HP by .02 cents/per share.

Expectations:

drive innovation in ink, laser, and graphics

continued traffic in enterprise services

continued traction in personal software by investing in disruptive technologies

moderate improvement in cash conversion cycle.Q&A

Increase in litigation expense offset sale of IP.
More work to do in labor structure, HP has to turn the revenue corner.
Optimistic about storage and networking.
There is momentum for a long-overdue PC refresh, but HP is cautious given the volatile nature of the business.
Personal software group is focused on profitable growth, not top-line growth.
HP is making big push for converged infrastructure and is bullish on storage.
HP is considering small-to-medium size acquisitions and a move from less reactive to more proactive sales
There is still work to do on the margin, but new products have better margins than older products.
HP has not seen the degradation in cash conversion cycle that we expected in 2014
Starting to see weakness in the results of competitors that HP had 2 years ago.
To the consumer HP seems like the paragon of stability in the market
Hybrid cloud offering is the right answer for customers
Response to HAVEN is tremendous
Softness on the toner side is due to incrementally more aggressive prices, and increased competition from clones and re-manufacturers.
Growth in ink sales
Gaining a considerable share in the printer market where HP has been historically underrepresented.
Lenovo's buyout of IBM's x86 servers creates opportunity for HP in gaining market share because of the change in management and roadmap at Lenovo and IBM.

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