HP Soars After Earnings Beat, Job Cuts (Update 1)

Updated from 4:31 p.m. EST to provide comments from the conference call.

NEW YORK ( TheStreet) -- Shares of Hewlett-Packard ( HPQ) surged in late trades Wednesday after the PC giant reports above-consensus quarterly results and unveiled plans to cut lay off a healthy chunk of its workforce over the next few years.

The Palo Alto, Calif.-based company reported fiscal second-quarter non-GAAP earnings of 98 cents per share on $30.70 billion in revenue. The company highlighted the performance of its storage business as 3Par continued to gain market share.

Analysts polled by Thomson Reuters were looking for earnings of 91 cents per share on $29.91 billion in revenue. Analysts polled by Estimize expected a profit of 92 cents per share on $29.54 billion in revenue.

In a separate release, HP announced plans to cut 27,000 jobs, or 8% of its workforce, by 2014. 9,000 are expected to leave this year, CFO Cathie Lesjak said on the conference call. The company is offering an early retirement plan as part of the restructuring plan. The Dow component expects to save between $3 billion and $3.5 billion by the end of fiscal 2014 from the job cuts. A significant portion of the savings are going to be reinvested back into the company, but CEO Meg Whitman would not commit to a specific percentage on the conference call.

"We are making progress in our multi-year effort to make HP simpler, more efficient and better for customers, employees, and shareholders," said Whitman in a press release. "This quarter we exceeded our previously provided outlook and are executing against our strategy, but we still have a lot of work to do."

Whitman added on the conference call that HP is taking aggressive steps to rebuild, and cautioned that turning the company around is going to take a long time. She added that while she does not expect any major acquisitions anytime soon, the company may do some "small tuck-ins."

Third-quarter guidance, however, came in lighter than expected. HP forecast non-GAAP earnings of 94 to 97 cents per share. Analysts polled by Thomson Reuters are looking for $1.02 per share. For the full year fiscal 2012, HP expects non-GAAP earnings of $4.05 to $4.10 per share. Analysts currently expect a profit of $4.03 per share.

The company said it returned $601 million in cash to shareholders during the quarter.

Shares of HP closed the session lower, off 3.26% to $21.07. The stock was last quoted at $23.30, up 10.5%, on volume of almost 8 million, according to Nasdaq.com.

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-- Written by Chris Ciaccia in New York

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