HP expected to report revenue decline ahead of planned split
Analysts predict revenue of $25.5bn for third quarter, results of which will be released today
HP is expected to report third-quarter revenues of around $25.5bn when it releases quarterly earnings later today - down from $27.6bn for the same period last year.
This will be the last earnings report that the company releases as a single entity. In November, the venerable IT giant will split into two companies - HP (which will deal with personal computers and printers), and Hewlett-Packard Enterprise, an enterprise technology and servers business.
While analysts are bullish on the growth prospects of Hewlett-Packard Enterprise, the PC and printers brand is in a far less enviable position. The PC market continues to slump, with Morgan Stanley predicting a 10% year-over-year decline in PC sales for the whole of 2015. What's more, the company has been struggling in China, its second-biggest market after the United States.
Hewlett-Packard Enterprise, however, is expected to grow fast. The combined entities shares are currently down 22% over the last 12 months, but investors have shown confidence in the enterprise business. That said, challenges remain. While the recent acquisition of Aruba Networks will allow Hewlett-Packard Enterprise to offer fully formed networking solutions (rather than standalone products), its on-premise hardware business has been hit by the growing demand of cloud services.
However, the split offers both new companies the opportunity to streamline their businesses. Analysts say that HP is expected to make announcements over job cuts along with its financial report today.