HP's Q4 Earnings Beat Street and Shares Rise
Computing giant Hewlett-Packard just reported its fourth-quarter results, and they're slightly better than expected, with some bad news mixed in. — HP's profit fell by 13 percent from the same period last year, to $1.01 a share.
Context & Ripple Effects
A year ago HP beat the street amid sales declines while absorbing an $8.8 billion charge, so a modest Q4 beat with profit down 13% to $1.01 a share reads as continuity rather than surprise — Meg Whitman's turnaround is being judged on whether the declines keep shrinking. The pickup across eight outlets including Bloomberg and ZDNet reflects how closely HP's quarterly cadence is watched as a proxy for the broader PC-and-enterprise franchise.
The beat also validates guidance Whitman gave at HP's annual financial meeting in October 2013, when her remarks on upcoming revenue sent shares up 6% to $22.05 — today's rise extends that credibility run.
First-order effects
- Shareholders reward the beat despite the 13% year-over-year profit decline, extending the stock momentum Whitman's October financial-meeting guidance started.
Second-order effects
- With Whitman having publicly named Microsoft and Intel as outright competitors in October, HP's differentiation bets — like the Leap Motion touchless input built into the Envy 17 as touchscreens become standard in Windows 8 notebooks — become load-bearing for defending margins against commoditization.
Third-order effects
- If the pattern of beating lowered expectations on shrinking profit holds, pressure will build on HP toward structural answers rather than incremental cost cuts — a mix shift toward software and services it seeded with acquisitions like Opsware, and continued portfolio pruning.
The trend: Under Meg Whitman, HP is running a credibility-first turnaround — small beats on declining profits that buy time while the PC business fights commoditization and new rivals.