HP Gets Earnings Beat but Takes Autonomy Hit (Update 1)
Updated with conference call comments from HP CEO Meg Whitman.
NEW YORK (TheStreet) -- HP(:HPQ) beat Wall Street's earnings estimates in its fourth-quarter results on Tuesday, but missed analysts' top-line forecasts.
The company's purchase of U.K. software maker Autonomy last year has been thrust into the spotlight, however, as HP recorded a non-cash charge of around $8.8 billion related to the deal.
"The majority of this impairment charge is linked to serious accountingimproprieties, disclosure failures and outright misrepresentations at AutonomyCorporation plc that occurred prior to HP's acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term," explained HP, in a statement released before market open.
The company's shares tumbled 9.77% to $12 on the news.
HP reported revenue of $30 billion, compared to $32.1 billion in the prior year's quarter. Excluding items, HP reported earnings of $1.16 a share, down from $1.17 a share in the same period last year. Analysts surveyed by Thomson Reuters were looking for sales of $30.43 billion and earnings of $1.14 a share.
Likes its rival Dell(:DELL), which reported weaker-than-expected third-quarter results last week, HP felt the strain of a slowing PC market.
Revenue from HP's Personal Systems Group (PSG) was down 14% year over year, while printing sales slipped 5%. HP's services revenue slipped 6% compared to the equivalent quarter last year, while Enterprise Servers, Storage and Networking (ESSN) was down 9%.
Software revenue increased 14% year over year, including the results of Autonomy.
Speaking during the company's conference call, HP CEO Meg Whitman acknowledged that the PSG division faced "weak demand and a challenging economic environment" during the quarter.
"As we move into the first quarter, we're managing the business tightly in what we expect will continue to be a challenging environment," she added.
HP generated $4.1 billion in cash flow from operations during the quarter.
The company, however, gave a tepid earnings outlook. For the coming quarter, HP expects earnings between 68 cents a share and 71 cents a share, well below analysts' estimates of 85 cents a share.
--Written by James Rogers in New York.
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