This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

HP Has Investors' Patience...For Now

Stocks in this article: HPQ DELL AAPL

NEW YORK ( TheStreet) -- HP's (HPQ) second-quarter earnings report showed glimmers of hope, but the company still has a long way to go before it gets back to the glory days of Bill Hewlett and Dave Packard.

The Palo Alto, Calif.-based firm reported fiscal second-quarter non-GAAP earnings of 98 cents a share on $30.70 billion in revenue. The no.1 PC maker highlighted the performance of its software business, which grew revenue 22% year-over-year, despite licensing weakness from Autonomy. Analysts polled by Thomson Reuters were looking for earnings of 91 cents a share on $29.91 billion in revenue.

Following the weak earnings report from Dell (DELL), expectations for HP were incredibly low. HP, however, surpassed expectations as CEO Meg Whitman tries to turn around the $41 billion tech behemoth. Investors reacted positively to the numbers, sending shares sharply higher this morning.

HP is still a long way from getting its ship righted

Whitman said on the earnings conference call that HP is taking aggressive steps to rebuild, and cautioned that turning the company around is going to take a long time. As part of that effort, HP announced plans to cut 27,000 jobs, or 8% of its workforce by 2014.

One third of those cuts are expected to happen this year. The restructuring will save HP $3 billion to $3.5 billion by the end of fiscal 2014, but a significant portion of the savings are going to be reinvested in the company, as it tries to become the innovator and pioneer it once was.

"We're at the beginning of the turnaround, maybe 10%, 15% of the way there," Whitman said in an interview on CNBC this morning.

Barclays Capital analyst Ben Reitzes tempered investors' enthusiasm in a research report, noting the long process of turning HP around. "While we believe any turnaround will be a multi-quarter effort for HP, investors are likely to see this report as a positive first step. That said, in the context of demand deterioration in Europe and secular pressures still in many businesses into 2H12, we still believe it may be too early to make the call for a sustainable turn," Reitzes wrote in his note. He rates HP "equal weight" with a $26 price target.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs