Hewlett Packard (HP) announced disappointing earnings this afternoon, with revenues missing analysts expectations. Earnings came in at $25.5bn, but analysts had expected earnings of $25.64bn and earnings per share of $0.86. On the latter measure, HP beat the predictions by a penny.
Shares rose as much as three per cent in extended trading.
Why it’s interesting
Hewlett Packard’s earnings come just hours after it announced deal selling its controlling stake in China-based H3C Technologies to Tsinghua, a Chinese state-owned company. In exchange for its 51 per cent stake HP will get $2.3bn (£1.5bn).
There are likely only one more set of earnings to come for HP before it splits in two, a move planned to help it focus on the corporate services market.
HP is very vulnerable to foreign exchange rates. It’s based in the US, but around two thirds of its business is conducted in overseas markets. In its first-quarter earnings, HP said it expected a six per cent hit from forex during 2015, so today’s figures were largely expected.
Another HP story that won’t go away is that of its ongoing sage with Autonomy. The web of claims and counter-claims in pretty complicated. HP took over Autonomy in 2011, only to be forced to take an £8.8bn writedown on it. In late March HP filed a lawsuit in the High Court alleging "fraudulent activity" by former Autonomy executives Mike Lynch and Sushovan Hussain.
Here’s a chart showing what’s going on in the legal saga.