HP's Whitman, Lesjak Discuss Q1 on Earnings Conference Call
Below are some highlights from Hewlett-Packard (NYSE: 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 </li>continued traffic in enterprise services </li>continued traction in personal software by investing in disruptive technologies </li>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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