Cost-cutting HP beats Wall Street expectations

HP's Spectre 13 comes in both detachable and ultrabook (seen above) designs.

(Credit: James Martin/CNET)

Hewlett-Packard reported better than expected fourth quarter results and indicated that its turnaround plans are progressing.

The company reported a fourth quarter profit of $1.4 billion, or 73 cents a share, on revenue of $29.1 billion, down 3 percent from the same quarter a year ago. Non-GAAP earnings for the fourth quarter were $1.01 a share. Wall Street was looking for HP to deliver fourth quarter non-GAAP earnings of $1 a share on revenue of $27.9 billion.

As for the outlook, HP projected first quarter earnings to be 82 cents a share to 86 cents a share on a non-GAAP basis. Wall Street was looking for 85 cents a share. For fiscal 2014, HP projected non-GAAP earnings to be $3.55 to $3.75 a share. That outlook was in line with its previous estimates. Wall Street expects $3.65.

In a nutshell, HP CEO Meg Whitman has managed to make HP more efficient. The company's key units with the exception of enterprise all saw revenue declines.

A few key points worth noting:

• The company reported fiscal 2013 earnings of $5.1 billion, or $2.62 a share, on revenue of $112.3 billion, down 7 percent from a year ago.
• HP said that it cut its net debt position by $1.3 billion. HP ended the year with $12.16 billion in cash and equivalents and long term debt of $16.6 billion.
• The company spent $3.13 billion on research and development for the year ended Oct. 31. That sum accounts to 2.5 percent of revenue.

This chart unfolds HP's various units. The key points:

• x86 servers sold well in the fourth quarter.
• Commercial printers fared well as did consumer. Notebooks and desktops were off from a year ago.
• "Other" in the personal systems group, most likely tablets, saw growth of 23 percent in the fourth quarter off of a small base.
• HP's software business took a hit as sales fell 9 percent in the fourth quarter.

(Credit: HP)

Here's a look at the key charts from HP's presentation. All regions saw revenue declines in the fourth quarter. 

(Credit: HP)

HP is seeing some slight growth for commercial PC sales, but consumer revenue fell 10 percent. 

(Credit: HP)

Storage and networking revenue was up slightly in the fourth quarter. Converged infrastructure has a better growth rate. 

(Credit: HP)

HP's software group is a disappointment no matter how you slice it. Licensing revenue took a hit in the fourth quarter. 

(Credit: HP)