HP revenue growth versus expectations
On August 20, 2015, The Hewlett-Packard Company (HPQ), commonly known as HP, announced its 3Q15 results. HP posted 3Q15 revenues and non-GAAP (generally accepted accounting principles) EPS (earning per share) of $25.3 billion and $.088 per share, respectively.
While HP wasn’t able to beat analyst expectations on the revenue front—analysts expected HP to post revenues of ~$26.25 billion in 3Q15—the company did manage to beat analyst expectations by $.03 per share on the EPS front.
This quarter’s report represents the last time that HP will post its quarterly financial results as a whole company, as its fiscal year will end on October 30, 2015. The following day, on November 1, 2015, HP will officially be split into two independently traded companies, with Hewlett-Packard Enterprise focusing on enterprise technology, software, and services, while HP Inc will focus on computer, PC, and printer operations.
HP’s earnings explained
On a year-over-year basis, HP’s revenues declined by 8% in 3Q15. However, on a constant currency basis, this declined was only 2%. In fiscal 2Q15, HP’s revenues fell by 7% on a year-over-year basis. The strengthening of the US dollar, as well as the continued sluggishness in the PC market, weighed heavily on HP, as almost the company’s entire operating divisions posted a decline in fiscal 3Q15.
Only Enterprise Group posted a meager 2% year-over-year growth in fiscal 3Q15. Negative revenue growth coupled with a tepid guidance for the current quarter, 4Q15, led HP’s share price to witness a fall, as the chart above shows.
The strengthening US Dollar (UUP) against other major currencies has impacted the technology industry as a whole. EMC Corporation (EMC), Microsoft Corporation (MSFT), and IBM (IBM) were the leading players whose earnings bore the brunt of rising dollar against major currencies, as reported in their recent quarterly results.
Please read the series Key Catalysts Behind The US Dollar Rally In 2014 to learn more about the journey of the US dollar. But read on to the next part of the series for more on how HP’s personal systems performed in 3Q15.