Hewlett-Packard expects to end falling sales and to stabilize next year. The company is expected to return more money to shareholders, as it reaches the halfway point of its five-year turnaround plan.
HP expects to generate free cash flow of $6 billion to $6.5 billion next year. Cathie Lesjak, chief financial officer, said that around half of that will be returned to shareholders through dividends and share buybacks.
“Most of the comments were about growth opportunities rather than fixing holes in the ship,” said Patrick Moorhead, analyst at Moor Insights & Strategy, who attended the presentation. “Investors like that.”
The electronic group which has suffered from the switch from PCs to tablets estimated non-GAAP diluted earnings per share from $3.55 to $3.75, excluding the cost of restructuring and amortization. This compares with the company’s forecast for $3.53-$3.57 in 2013 and a consensus analyst forecast of $3.61 in 2014, according to Bloomberg data.
Meg Whitman, chief executive, said she had “enormous confidence” in the turnaround plan. In the past year HP had moved from falling “dangerously behind” to a position where she could see it becoming an industry leader in 2016.
PC shipments fell 7.6% globally in the third quarter to 82 million units, which is slightly less than expected because of temporary jump in business purchases, according to an IDC report published on Wednesday.
The top three PC sellers all saw modest growth from the third quarter of 2012. HP retained its number two slot but Chinese rival Lenovo gained share in the US market, growing more than 2% from the same period last year. Dell saw an increase in shipments year on year for the first time since 2011.
Whitman, who has been known to take a pragmatic approach with corporate customer, emphasized again the need for a “maniacal focus” on listening to clients.
“This year alone I met with close to 1,000 customers and partners,” Whitman said.
Underscoring the shifting IT landscape, Whitman acknowledged that HPs traditional profitable segments (printing and PCs) were in decline and the company is in the process of transitioning to growing sectors such as storage, networking and other services to corporations.
“Over time these will become bigger revenue businesses and will overtake the declining businesses,” she assured.
The current consensus among 31 polled investment analysts is to hold stock in Hewlett-Packard Co. This rating has held steady since September, when it was unchanged from a hold rating.
The tech firm rose almost 9% yesterday while being on 58.6% run on a year-to-date basis.
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