HP’s Profit Falls 91%, but It Beats Expectations

PALO ALTO, CA -- (MARKET WIRE) -- Nov 21, 2011 -- HP (NYSE: HPQ)

  • Fiscal 2011 non-GAAP net revenue of $127.4 billion, non-GAAP diluted earnings per share of $4.88 and free cash flow of $9.1 billion grew 1%, 7% and 8%, respectively, over the prior year

  • Fiscal 2011 GAAP net revenue of $127.2 billion, GAAP diluted earnings per share of $3.32 and cash flow from operations of $12.6 billion

  • Fourth quarter non-GAAP net revenue of $32.3 billion, non-GAAP diluted earnings per share of $1.17 and free cash flow of $1.2 billion were down 3%, 12% and 43%, respectively, from the prior-year quarter

  • Fourth quarter GAAP net revenue of $32.1 billion, GAAP diluted earnings per share of $0.12 and cash flow from operations of $2.4 billion

HP today announced financial results for its fourth quarter and full fiscal year ended Oct. 31, 2011.

"HP has a great opportunity to build on our strong hardware, software, and services franchises with leading market positions, customer relationships, and intellectual property," said Meg Whitman, HP president and chief executive officer. "We need to get back to the business fundamentals in fiscal 2012, including making prudent investments in the business and driving more consistent execution."

"While FY11 proved to be a challenging year, we grew non-GAAP EPS 7% and generated $12.6 billion in cash flow from operations," said Cathie Lesjak, HP executive vice president and chief financial officer. "We're remaining cautious heading into FY12 but are focused on delivering our earnings outlook and driving shareholder value."

Earnings highlights

------------------ ------------------------------ --------------------------
                    Q4 FY11   Q4 FY10      Y/Y      FY11    FY10      Y/Y   
------------------ ------------------------------ --------------------------
GAAP net revenue                                                            
 ($B)              $   32.1  $   33.3        (3%) $127.2  $126.0         1% 
------------------ ------------------------------ --------------------------
GAAP operating                                                              
 margin                 2.5%      9.9% (7.4 pts)     7.6%    9.1% (1.5 pts) 
------------------ ------------------------------ --------------------------
GAAP net earnings                                                           
 ($B)              $    0.2  $    2.5       (91%) $  7.1  $  8.8       (19%)
------------------ ------------------------------ --------------------------
GAAP diluted EPS   $   0.12  $   1.10       (89%) $ 3.32  $ 3.69       (10%)
------------------ ------------------------------ --------------------------
Non-GAAP net                                                                
 revenue ($)       $   32.3  $   33.3        (3%) $127.4  $126.0         1% 
------------------ ------------------------------ --------------------------
Non-GAAP operating                                                          
 margin                 9.7%     12.0% (2.3 pts)    10.8%   11.4% (0.6 pts) 
------------------ ------------------------------ --------------------------
Non-GAAP net                                                                
 earnings ($B)     $    2.4  $    3.1       (23%) $ 10.4  $ 10.9        (4%)
------------------ ------------------------------ --------------------------
Non-GAAP diluted                                                            
 EPS               $   1.17  $   1.33       (12%) $ 4.88  $ 4.58         7% 
------------------ ------------------------------ --------------------------
                                                                            

Information about HP's use of non-GAAP financial information is provided under "Use of non-GAAP financial information" below. Unless otherwise specified, all revenue amounts below are calculated on a GAAP basis.

Full year fiscal 2011
GAAP net revenue for the full fiscal year 2011 was $127.2 billion, up 1% compared with the prior year or down 1% when adjusted for the effects of currency. GAAP operating profit was $9.7 billion, and GAAP diluted earnings per share (EPS) was $3.32, down 10% from the prior year.

Non-GAAP net revenue for the full fiscal year 2011 was $127.4 billion, up 1% compared with the prior year or down 1% when adjusted for the effects of currency. Non-GAAP operating profit was $13.8 billion, and non-GAAP diluted EPS was $4.88, up 7% from the prior year.

Fiscal 2011 non-GAAP net revenue includes an additional $0.2 billion of revenue resulting from the exclusion of contra revenue associated with sales incentive programs implemented in the fourth quarter in connection with the wind down of HP's webOS device business, net of fourth quarter webOS device revenue. Non-GAAP earnings and operating profit information excludes after-tax costs of $3.3 billion, or $1.56 per diluted share, related to the wind down of HP's webOS device business, impairment of goodwill and purchased intangible assets, amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

Fourth fiscal quarter 2011
For the quarter, GAAP net revenue of $32.1 billion was down 3% from the prior-year period. Non-GAAP net revenue of $32.3 billion was down 3% from the prior-year period as reported and down 6% when adjusted for the effects of currency.

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