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

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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.


Posted-In: Earnings News


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