PALO ALTO -- Technology giant Hewlett-Packard on Thursday reported first-quarter earnings that significantly beat Wall Street's expectations, although its sales were slightly down from the same period a year ago.
The Palo Alto corporation said it earned a $1.4 billion profit on sales of $28.2 billion, compared with $1.2 billion profit and $28.4 billion in sales during the same period a year ago.
That worked out to fully reported earnings of 74 cents a share. Analysts surveyed by Thomson Reuters generally had expected 65 cents a share on sales of $27.2 billion.
Many analysts track so-called adjusted earnings, which exclude certain one-time and other expenses. HP's adjusted earnings were 90 cents a share, also higher than the general estimate of 84 cents a share.
"HP is in a stronger position than we have been in a long time," CEO Meg Whitman said during a conference call with analysts. "We've made significant progress," although she added, "we still have a long way to go."
On a year-over-year basis, HP's sales have fallen steadily in recent quarters. That's largely been due to dwindling sales of its personal computers and printers, which account for most of its revenue. The company also offers a wide variety of other products, including computer networking switches, routers, servers, data storage devices, cybersecurity services and data-analysis software.
The sales slump has been a concern to many investors. In addition, HP has been heavily criticized for some expensive corporate acquisitions in recent years, including its $11 billion deal to buy British software company Autonomy in 2011. Months after completing that deal, HP wrote off $8.8 billion of Autonomy's value, saying it had been misled about Autonomy's worth. It also recently replaced two board members who'd been blamed for the purchase.
Autonomy's former CEO, Michael Lynch, has denied HP's claims that Autonomy's value had been artificially inflated. But those accusations are under investigation by U.S. and British authorities. In addition, the Autonomy purchase has resulted in several lawsuits by HP shareholders, alleging that HP didn't protect their interests when it pursued Autonomy.
Since becoming CEO in September 2011, Whitman has cut expenses -- including a total of 34,000 employees by the end of October -- shuffled the company's executive ranks and tried to focus it on more profitable products.
But despite the company's rising stock price in recent months, Wall Street experts expressed mixed views about the company's future.
"We reiterate our view that HP is well along in its turnaround and continue to believe FY 2014 should be a bottoming in a number of business segments, setting up for growth in FY 2015," analysts at Wells Fargo Securities advised their clients in a note this week.
In a separate note, Bernstein Research analysts also were encouraged by HP Chief Financial Officer Cathie Lesjak's comments that the company was exploring other possible non-labor-related expense cuts, which the analysts said "would make us more confident in the company's ability to meet its targets."
But other analysts fear HP's investors may be getting restless, waiting for the company to make a big rebound. And in a note this week, Cantor Fitzgerald analyst Brian White added, "we believe investors will increasingly require convincing proof that HP's turnaround has long-term, fundamental underpinnings."
Contact Steve Johnson at 408-920-5043. Follow him at Twitter.com/steveatmercnews.