Santa Barbara, CA – (StockNewsDesk) – 11/27/2014 — Hewlett-Packard (HP), one of the largest computer makers, fell short of revenue estimates. The profits of the company, however, were in line with the Street expectations. Rapid transit in the cloud business and a slow down in the personal computer sales market is primarily responsible for a fall in revenue numbers. These results came in just ahead of the company splitting in two. One company will take care of computer sales while the other will be responsible for computer hardware and other services.
The revenue of the company fell just short of estimates. Sales for this period came in at $28.4 billion, compared to analysts’ expectations of $28.8 billion. On an Earnings Per Share (EPS) basis (excluding some items), the company earned $1.06 a share, in line with estimates. The share price of the company had gained 34% this fiscal year, however, it fell 4.3% after reporting lower than expected numbers. The personal computer (PC) segment of the company reported numbers that impressed investors. However, the transition into the rapidly changing cloud business weighed on the company’s revenue.
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Profits Hampered by Enterprise Sales
Net income for the fourth quarter fell to $1.33 billion from the earlier period’s figure of $1.40 billion. EPS of the stock fell to $0.70 a share, compared to the previous period’s $0.73 a share. These figures do not include the cost of splitting the company. PC sales increased 4%, while sales of the printing segment declined 5%. The revenue of the company was pulled down by the enterprise segment. Enterprise services fell 7% in the quarter, while enterprise group sales fell 4%. Enterprise group sales include storage and servers. The software segment of the company slid 1%.
Guidance below Expectation
The company said that for the current period, EPS would be in the range of $0.89 to $0.93. Guidance provided by the company also fell short of the estimates. For fiscal 2015, the company expects to earn a profit in the range of $3.83 to $4.03 a share, compared to the Street estimates of $3.95 a share. The company expects a slowdown in the PC segment in fiscal 2015.
HP expects to shift its focus on the cloud computing business. Giants like International Business Machines (IBM) and Amazon have gained a lot of traction in the industry, and are HP’s biggest competitors in the cloud computing business. Inability to gain a strong foothold in this segment is responsible for the company’s low profitability.
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