HP shares fall as sales skid 8 percent
Hewlett-Packard (HPQ) posted quarterly earnings that topped analysts' expectations on Thursday but sluggish sales as its legacy business continued to drag.
The stock fell nearly 1 percent in extended trading after HP posted adjusted earnings of 88 cents per share on $25.3 billion in revenue. Sales fell 8 percent from the year before.
Analysts had expected the company to report earnings of 85 cents a share on $25.44 billion in revenue, according to a consensus estimate from Thomson Reuters.
The report comes ahead of HP's plans to split itself into two separate companies on Nov. 1. HP Enterprise-its faster growing segment-will focus on large and small businesses, and HP Inc. will house the company's personal systems and printing business.
Read More HP to 'struggle' through earnings report: Analyst
Sales for HP's Enterprise Group rose 2 percent year over year, with a 13 percent operating margin. Enterprise Services revenue declined 11 percent from the year before, with a 6 percent operating margin.
Printing and personal systems revenue continued to sag, dipping to $12.6 billion from $14.24 billion a year ago, or 12 percent lower.
Still, CEO Meg Whitman touted the company's performance and progress as it prepares to split. In the company's conference call, she acknowledged a "challenging" macroeconomic environment amid a stronger U.S. dollar, soft consumer spending and weakness in China.
She noted that "very soft" personal systems revenue will likely persist into the next fiscal year, but held that HP is well positioned in segments like storage and networking.
"Overall, I'm pleased with our progress in many key areas," she said, praising the company's focus as it prepares for the business separation.
Last week, HP said the boards of the newly formed companies will include members from the existing company's board.
HP Enterprise's board of directors will consist of five new members and eight from the old company's board. HP Inc.'s board will consist of seven new directors and five from the old company's board.
HP Enterprise expects to have $10 billion in cash after the separation and a total of $16 billion in debt, according to investment firm Stifel.
HP projected third-quarter adjusted earnings per share on a range of 92 cents to 98 cents. For the fiscal year, it set its profit outlook to a range of $3.59 to $3.65 a share.
"We get it. They're not growing. Yeah, everything's bad, but maybe there's some upside when they do split and things start to get going for them in the enterprise segment," said Daniel Morgan of Synovus Trust Company, which owns HP shares.
At its close Thursday, Hewlett-Packard had declined more than 30 percent year to date, underperforming both the S&P 500 and the technology sector.
-CNBC's Karma Allen contributed to this report.
More From CNBC
