HP shares rise as sales forecast improves2013-10-09 20:09:26http://www.ft.com/cms/s/1da3c64c-310c-11e3-b991-00144feab7de,s01=1.html
Hewlett-Packard expects to stabilise its falling sales next year and hinted it might return more money to shareholders, as it reaches the halfway point of its five-year turnround plan.
HP's shares rose more than 9 per cent after the technology group said earnings per share in 2014 would match market expectations and its chief executive said its attention could switch from paying down debt to returning cash to shareholders.
The Silicon Valley-based group - which has suffered from the switch from PCs to tablets and the falling use of printers - forecast non-GAAP diluted earnings per share from $3.55 to $3.75, compared with a predicted $3.53 to $3.57 for 2013.
While earnings were boosted by cost savings from restructuring, revenue will continue to decline in 2014 but at a slower rate than in 2013. Sales have been falling for the last two years.
Meg Whitman, chief executive, said she had "enormous confidence" in the turnround plan. In the last year, HP had moved from falling "dangerously behind" to a position where Ms Whitman said she could see it becoming an industry leader in 2016.
"I'm really proud of the progress we've made. I'm not sure the management team could have done more in the last couple of years," she told an analyst meeting in San Jose, California. "But we've got to do it all over again next year: even faster and even better."
The stock had declined 14 per cent since August when Ms Whitman was forced to abandon her forecast for a return to revenue growth next year, blaming mistakes in the enterprise group.
Ms Whitman, former Ebay chief executive and candidate for California governor, took over the ailing technology group in September 2011. She has plotted a five year turnround plan, with next spring marking the halfway point.
She said the next financial year would be "pivotal" in HP's path to a "GDP-like growth rate". The group would focus on helping customers make the most of opportunities such as the cloud and big data, while stabilising other sections of the business.
But she warned shifting market forces are "very tough, very real and accelerating" and said HP faced tough competition from emerging rivals as well as established companies such as Intel and Microsoft.
Ms Whitman also said the group had cut net debt to the level it was before it acquired Autonomy, the UK software group, which it later took a large writedown on, in 2011. She said HP now had "a lot more flexibility to return cash to shareholders".
Shares were up 9.1 per cent to $22.62 in afternoon trading in New York.
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