HP Reports Fiscal 2014 Net Revenue of $111.5B, Down 1 Percent from the Previous Year

PALO ALTO, CA—November 26, 2014—HP has announced financial results for fiscal 2014 and fourth quarter ended October 31, 2014. Fiscal 2014 net revenue of $111.5 billion was down 1 percent from the prior-year period and flat on a constant currency basis.

Fiscal 2014 GAAP diluted net earnings per share (EPS) was $2.62, flat in comparison with the prior-year period amount and within the previously provided outlook of $2.60 to $2.64 per share. Fiscal 2014 non-GAAP diluted net EPS was $3.74, up from $3.56 in the prior-year period and within the previously provided outlook of $3.70 to $3.74 per share. Fiscal 2014 non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax costs of $2.1 billion and $1.12 per diluted share, respectively, related to restructuring charges, the amortization of intangible assets and acquisition-related charges.

Fourth quarter net revenue of $28.4 billion was down 2 percent from the prior-year period and down 3 percent on a constant currency basis.

Fourth quarter diluted net GAAP EPS was $0.70, down from $0.73 in the prior-year period and within its previously provided outlook of $0.67 to $0.71 per share. Fourth quarter non-GAAP diluted net EPS was $1.06, up from $1.01 in the prior-year period and within its previously provided outlook of $1.03 to $1.07. Fourth quarter non-GAAP net earnings and non-GAAP diluted net EPS exclude after-tax costs of $684 million and $0.36 per diluted share, respectively, related to restructuring charges, the amortization of intangible assets and acquisition-related charges.

"I'm excited to say that HP's turnaround continues on track," said Meg Whitman, chairman, president and CEO, HP. "In FY14, we stabilized our revenue trajectory, strengthened our operations, showed strong financial discipline, and once again made innovation the cornerstone of our company. Our product roadmaps are the best they've been in years and our partners and customers believe in us. There's still a lot left to do, but our efforts to date, combined with the separation we announced in October, sets the stage for accelerated progress in FY15 and beyond."

HP fiscal 2014 fourth quarter and full-year financial performance

Outlook
For fiscal 2015, HP estimates non-GAAP diluted net EPS to be in the range of $3.83 to $4.03 and GAAP diluted net EPS to be in the range of $3.23 to $3.43. Fiscal 2015 non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.60 per share, related primarily to the amortization of intangible assets and restructuring charges.

For the fiscal 2015 first quarter, HP estimates non-GAAP diluted net EPS to be in the range of $0.89 to $0.93 and GAAP diluted net EPS to be in the range of $0.72 to $0.76. Fiscal 2015 first quarter non-GAAP diluted net EPS estimates exclude after-tax costs of approximately $0.17 per share, related primarily to the amortization of intangible assets and restructuring charges.

The fiscal 2015 full year and first quarter outlooks do not include costs associated with the separation, which are expected to be non-GAAP adjustments beginning in Q1 2015.

Asset management
HP generated $2.7 billion in cash flow from operations in the fourth quarter, down 4 percent from the prior-year period. Inventory ended the quarter at $6.4 billion, up 3 days year over year to 27 days. Accounts receivable ended the quarter at $13.8 billion, down 5 days year over year to 44 days. Accounts payable ended the quarter at $15.9 billion, up 11 days year over year to 67 days. HP's dividend payment of $0.16 per share in the fourth quarter resulted in cash usage of $309 million. HP also utilized $750 million of cash during the quarter to repurchase approximately 21.7 million shares of common stock in the open market. HP exited the quarter with $15.5 billion in gross cash.

Fiscal 2014 fourth quarter segment results

• Personal Systems revenue was up 4 percent year over year with a 4.0 percent operating margin. Commercial revenue increased 7 percent and Consumer revenue decreased 2 percent. Total units were up 5 percent with Desktops units down 2 percent and Notebooks units up 8 percent.
• Printing revenue was down 5 percent year over year with an 18.1 percent operating margin. Total hardware units were down 1 percent with Commercial hardware units up 5 percent and Consumer hardware units down 4 percent. Supplies revenue was down 7 percent.
• Enterprise Group revenue was down 4 percent year over year with a 14.8 percent operating margin. Industry Standard Servers revenue was down percent, Storage revenue was down 8 percent, Business Critical Systems revenue was down 29 percent, Networking revenue was up 2 percent and Technology Services revenue was down 3 percent.
• Enterprise Services revenue was down 7 percent year over year with a 6.8 percent operating margin. Application and Business Services revenue was down 6 percent and Infrastructure Technology Outsourcing revenue declined 7 percent.
• Software revenue was down 1 percent year over year with a 31.1 percent operating margin. License revenue was up 2 percent, support revenue was down 1 percent, professional services revenue was down 5 percent and software-as-a-service (SaaS) revenue was flat.
• HP Financial Services revenue was down 1 percent year over year with a 1 percent decrease in net portfolio assets and a 15 percent increase in financing volume. The business delivered an operating margin of 12.1 percent.

About HP
HP creates new possibilities for technology to have a meaningful impact on people, businesses, governments and society. With the broadest technology portfolio spanning printing, personal systems, software, services and IT infrastructure, HP delivers solutions for customers' most complex challenges in every region of the world.

Source: HP.