Updated from 10:23 a.m. to include updated share price and additional thoughts from Pacific Crest analyst.

NEW YORK (TheStreet) HP (HPQ) - Get Report reported fiscal second-quarter earnings last night, with initial attention focused on the premature release of the numbers. However, continued layoffs at the Silicon Valley tech giant, to the tune of an additional 11,000 to 16,000 jobs, have shifted attention back onto HP's restructuring plan.

In May 2012, HP adopted a multi-year restructuring plan to cut 34,000 jobs to re-engineer its workforce. The company increased the size of its workforce reduction on Thursday, saying that it plans to cut an additional 11,000 to 16,000 jobs.

On the earnings call, CEO Meg Whitman addressed adding to the layoffs, citing the long-term efficiency benefits to HP. "We've actually increased the number of people who will leave the company a couple of times during this program," Whitman stated on the call. "And actually on earlier call, we actually signaled that there might be more opportunity. And I am actually not disappointed at all with how we're doing, we just see more opportunities to lower our cost structure, streamline our operations without impairing our effectiveness in fact making us a more nimble and decisive company."

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CFO Cathie Lesjak added that the cuts give HP the opportunity to"create more capacity to invest," noting that the tech giant's turnaround hinges on the company's ability to innovate and bring new solutions to the marketplace that are different to the competition's.

Whitman said that since she joined HP in Sept. 2012, she's seen additional opportunities where the firm can shrink in size and get better. "It [the layoffs] will be across almost all the business units and across all the geographies and particularly in some of the functional areas that sort of help the businesses grow," Whitman stated. "So listen I'm not at all disappointed, I think it's the natural course of what makes sense in a turnaround of this size and scale."

For the fiscal 2014 third quarter, HP estimates non-GAAP earnings between 86 cents and 90 cents a share. For fiscal 2014, HP said it believes non-GAAP earnings will be between $3.63 and $3.75 a share. The company will take a 95 cent a share GAAP charge "related primarily to the amortization of intangible assets and restructuring charges."

It appears that though HP was able to meet second-quarter earnings estimates of 88 cents a share, the company still has much work to do to really grow the top line, a fact not lost on Wall Street. HP generated $27.3 billion in revenue, while analysts surveyed by Thomson Reuters expected $27.42 billion in sales. 

Shares of HP fell yesterday, tumbling 2.3% to $31.78 following the early earnings release, but were soaring in early Friday trading, gaining 5.6% to $33.56 as investors digested the conference call.

The company noted in the release that cash flow from operations was $3 billion, and it returned $1.1 billion to shareholders in the forms of dividends and buybacks during the second quarter. Net cash improved by $1 billion, the ninth consecutive quarterly improvement of approximately $1 billion or more.
Only one of the company's operating segments showed year-over-year growth - the company's Personal Systems (PCs) segment, which many had thought was in a continuous secular decline. Revenue from Personal Systems was up 7% year over year, but Printing revenue fell 4% during the same time. Enterprise Group revenue was down 2% year over year, while Enterprise Services revenue fell 7% over the same period. Software revenue was flat, while HP Financial Services revenue was down 2% year over year, according to the release.

The company's results back up what research firm Gartner said in April, noting that HP took market share, particularly in Europe, the Middle East and Asia.

When Gartner released its worldwide PC shipment findings for the first quarter, it found that although the PC market continued to shrink, with PC makers selling 76.6 million units, down 1.7% year-over-year, HP looks to be gaining some traction. Thanks to strength in EMEA (Europe, Middle East and Africa), HP owned 16% of the market, selling 12.2 million units, up from 15.1% or 11.78 million in the year-ago quarter. That's good enough for second place behind Lenovo, which continues to dominate the PC market (including -x86 tablets, but not other tablets). Lenovo had 16.9% of the market at the end of the first quarter of 2014, up from 16% at the end of the first quarter in 2013.

Despite the rebound in the PC segment, it's clear HP has a lot of work to do to turn itself around and get the top line growing again. The company is increasing spending in research & development, with CFO Lesjak noting the increase is coming in not one particular segment, but all areas. "Just about every business that we have is increasing R&D on a year-over-year basis. Obviously it's focused in strategic areas, cloud; big data; security; page wide array; 3D printing kind of across the board we are increasing R&D," Lesjak said. "So it's really not a specific comment for a particular business."

Following the results, analysts were largely positive on HP due to increased savings following the layoffs, but were concerned about the potential impact on morale and the company's longer-term revenue forecasts. Here's what a few of them had to say:

Cantor Fitzgerald analyst Brian White (Hold, $30 PT)

"Last night, HP reported 2Q:FY14 results with both sales and pro forma EPS coming in below our projections, while the company's 3Q:FY14 EPS outlook is uninspiring, in our view, and the company announced plans to reduce headcount by another 11,000 to 16,000. In our opinion, HP gained more wiggle room around its margin profile through yet another restructuring initiative; however, we continue to question the company's competitive position with a portfolio that we believe is highly exposed to some of the more commoditized areas of the IT industry. Essentially, it remains difficult for us to understand the end game for HP."

UBS analyst Steven Milunovich (Neutral, $34 PT)

"HP's F2Q was as expected, which is slightly disappointing given it tends to beat by a few cents. The revenue decline of 1% YoY to $27.3bn and non-GAAP EPS of $0.88 were on our estimates. Upside surprises included PC revenue growth of 7%, networking growth of 6%, the printer pretax margin of 19.5%, and European revenue growth of 5%; downsides included printers supplies revenue down 6%, storage declining by 6%, and the Enterprise Group margin flat sequentially at 14.4%."

Credit Suisse analyst Kulbinder Garcha (Neutral, $35 PT)

"Management now expects total workforce reductions to be 45,000-50,000 over the course of the current restructuring program (up from 34,000 previously), and this is expected to generate $1bn in gross, incremental savings. Our concerns are that parts of this will be reinvested and HP is turning into a perennial restructuring story (FY12-14 the company is expected to book some $4.9bn in charges, 22% of net income for the same period). This could suggest a reduced revenue outlook going forward; even if there have been signs of stabilization."

BMO Capital Markets analyst Keith Bachman (Market Perform, $38 PT)

"We think investors will be left to ponder the larger question of what incremental cost cuts suggest about the ability of HP to improve revenue growth and drive long-term earnings. We note that current management started cost cuts in 2012. However, previous management embarked on a multi-year cost-cutting journey prior to 2012. In FY13, HP reduced gross costs by ~$2 billion and operating income declined by $1.7 billion. In FY14, gross cost reductions were previously targeted at $1.1 billion, plus incremental cost savings just announced with the recent restructuring (net savings of $0.03, or about $65 million pretax), and we project operating income to increase by ~$240 million. In FY15, gross cost reductions are targeted at ~$1 billion, and we project operating income to increase by $220 million. Our point is that HP is using the majority of cost savings for pricing and/or to reinvest in the business."

Pacific Crest Securities analyst Brent Bracelin (Outperform, $37 PT)

"HP announced its intent to widen its restructuring by another 11,000 to 16,000 employees. On one hand, this adds a new layer of uncertainty around HP's capacity to grow in the longer term, but on the other hand, it increases the likelihood of a profit recovery from a seven year low operating margin of 8.5% as operations right-size. We are lowering our revenue estimates for this year and next but maintaining our forecast that HPQ can grow EPS by 5% annually on an improving margin structure and buybacks."

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--Written by Chris Ciaccia in New York

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