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HP is getting so good now at negative growth, it should patent it

Five quarters in a row are down – and an extra 2,000 or so staff to go by end of year

HP CEO Meg Whitman said on Thursday that she was pleased with the company's performance during the third quarter of its fiscal 2015, despite the fact that nearly every reporting segment was down annually.

The PC and printer giant missed analysts' estimates on revenue, with total sales for the quarter of $25.35bn, an 8.1 per cent decline from the year-ago period. But it beat the Street with earnings of $0.88 per diluted share.

Net earnings for the quarter were $854m. That was a 13.3 per cent decline from the same period a year ago, and it was the fifth quarter in a row in which HP's net earnings dipped annually.

Personal Systems revenue was down 13.4 per cent, year on year, to $7.49bn. If HP thought the slight sales upticks it saw for both desktops and notebooks last quarter might be an indication that the market was turning around, those hopes were dashed this quarter. Every category was down, and sales of desktop PCs, in particular, were down 20.5 per cent from last year's quarter.

To be fair, it seems likely that many customers were delaying computer purchases until the launch of Windows 10 on July 29. HP's quarter ended on July 31, so it will be interesting to see how its Personal Systems numbers pan out in three months' time.

Printing revenue, meanwhile, was down 8.6 per cent from the year-ago period, to $5.1bn – and you can't blame Windows 10 for that. Consumer printers were the real black spot here, with sales down 23.8 per cent.

The Enterprise Group experienced a modest 2 per cent annual gain, with total revenue for the quarter at $7bn. Once again, sales of industry standard servers were up an encouraging 7.7 per cent. But the higher-margin "business critical systems" saw sales slump 21 per cent, year on year. Technology services revenue was also down 9.3 per cent. Curiously, however, sales of networking equipment were up 22.5 per cent.

Things weren't so great on the Enterprise Services side, however, which saw its revenue dip to $4.98bn, an 11 per cent year-on-year decline. Infrastructure outsourcing was down 13.1 per cent, while application and business services was down 7.4 per cent.

If you combine the business units that will become Hewlett-Packard Enterprise following the company's split in October, their total quarterly revenue was up a mere 2 per cent from a year ago. But it's the HP Inc side that faces the real challenges, as combined revenue for the PC and printing divisions was down 11.5 per cent.

Investors didn't seem too bothered by HP's lackluster results, though. Maybe they bought Whitman's assurances that everything looks a lot rosier once you correct the figures for constant currency, and that HP's businesses are making promising market share gains. Or maybe they're just looking forward to the split.

Either way, HP's share price dipped only slightly on the news, landing down around 2 per cent during after-hours trading.

Finally, chief financial officer Catherine Lesjak added that HP plans to shed slightly more workers than expected – up to 2,750 staffers – as part of its ongoing mass layoffs that started in 2012. "We are nearing the end of our 2012 restructuring program, and 3,900 people exited in Q3," she told analysts on a conference call on Thursday.

"By the end of Q4, we expect to exceed our prior estimate of 55,000 people to exit the company by up to 5 per cent, but will not exceed the forecasted GAAP-only charges." ®

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