HP Says Turnaround Remains On Track, Provides Fiscal 2014 Outlook
Today at HP's 2013 Securities Analyst Meeting, HP's leadership team provided an update on HP's progress executing against its turnaround plan and future strategy.
HP's president and chief executive officer Meg Whitman reviewed the accomplishments of the past year -- a "fix and rebuild" year -- noting that the multi-year turnaround remains broadly on track.
In particular, the company has met or exceeded quarterly non-GAAP diluted earnings per share (EPS) outlook since the turnaround plan began through Q3 of fiscal 2013. HP also provided outlook in August that HP expects free cash flow to approach $8 billion by the end of FY13. In addition, HP reduced operating company net debt by almost $8 billion over the past 12 months, approaching a goal of zero, and its research and development (R&D) spending expected to be in excess of $3 billion in fiscal 2013.
"While there is a lot more work to be done, I am confident about the progress we are making," said Whitman. "We're producing tangible results, strengthening our balance sheet and delivering innovative products across all our key segments. We are implementing the changes needed to support our multi-year turnaround journey, reaffirm HP's leadership position, and create enduring value for customers as well as for our shareholders."
Whitman also emphasized that the company "has the right leadership team in place to advance its strategy, drive innovation across the business and improve its go-to-market execution." Whitman reiterated that she expects HP's revenues to grow in line with gross domestic product (GDP) over the long term.
Cathie Lesjak, HP's executive vice president and chief financial officer, provided a financial outlook for fiscal 2014. With pockets of growth helping to offset continuing challenges in the macro environment and weak public sector spending, HP expects the year-over-year revenue decline in fiscal 2014 will moderate from fiscal 2013.
HP anticipates operating profit dollars to be flat to up year-over-year in fiscal 2014, due to its continued focus on cost savings and operational efficiency. The company estimates non-GAAP diluted EPS for fiscal 2014 to be in the range of $3.55 to $3.75. HP estimates GAAP diluted EPS to be in the range of $2.85 to $3.05 for fiscal 2014. Fiscal 2014 non-GAAP diluted EPS estimates exclude after-tax costs related primarily to the amortization of purchased intangible assets and a restructuring charge of approximately $0.8 billion.
HP expects to generate approximately $9 billion to $9.5 billion in cash flow from operations in fiscal 2014. After deducting estimated fiscal 2014 capital expenditures, the company anticipates free cash flow of $6 billion to $6.5 billion in fiscal 2014.
In fiscal 2014, the company is expecting to return at least 50% of free cash flow to shareholders through dividends and share repurchases.
In addition, HP will invest in its product portfolio to accelerate high-growth areas in the New Style of IT. HP plans to reinvest approximately $0.12 per share of savings from its restructuring program into the business in fiscal 2014, including products and solutions such as 3PAR, networking, Vertica and cloud solutions.
HP has been trying to ease the pain of a declining PC market by cutting costs and focusing on more profitable areas.
In particular, the company has met or exceeded quarterly non-GAAP diluted earnings per share (EPS) outlook since the turnaround plan began through Q3 of fiscal 2013. HP also provided outlook in August that HP expects free cash flow to approach $8 billion by the end of FY13. In addition, HP reduced operating company net debt by almost $8 billion over the past 12 months, approaching a goal of zero, and its research and development (R&D) spending expected to be in excess of $3 billion in fiscal 2013.
"While there is a lot more work to be done, I am confident about the progress we are making," said Whitman. "We're producing tangible results, strengthening our balance sheet and delivering innovative products across all our key segments. We are implementing the changes needed to support our multi-year turnaround journey, reaffirm HP's leadership position, and create enduring value for customers as well as for our shareholders."
Whitman also emphasized that the company "has the right leadership team in place to advance its strategy, drive innovation across the business and improve its go-to-market execution." Whitman reiterated that she expects HP's revenues to grow in line with gross domestic product (GDP) over the long term.
Cathie Lesjak, HP's executive vice president and chief financial officer, provided a financial outlook for fiscal 2014. With pockets of growth helping to offset continuing challenges in the macro environment and weak public sector spending, HP expects the year-over-year revenue decline in fiscal 2014 will moderate from fiscal 2013.
HP anticipates operating profit dollars to be flat to up year-over-year in fiscal 2014, due to its continued focus on cost savings and operational efficiency. The company estimates non-GAAP diluted EPS for fiscal 2014 to be in the range of $3.55 to $3.75. HP estimates GAAP diluted EPS to be in the range of $2.85 to $3.05 for fiscal 2014. Fiscal 2014 non-GAAP diluted EPS estimates exclude after-tax costs related primarily to the amortization of purchased intangible assets and a restructuring charge of approximately $0.8 billion.
HP expects to generate approximately $9 billion to $9.5 billion in cash flow from operations in fiscal 2014. After deducting estimated fiscal 2014 capital expenditures, the company anticipates free cash flow of $6 billion to $6.5 billion in fiscal 2014.
In fiscal 2014, the company is expecting to return at least 50% of free cash flow to shareholders through dividends and share repurchases.
In addition, HP will invest in its product portfolio to accelerate high-growth areas in the New Style of IT. HP plans to reinvest approximately $0.12 per share of savings from its restructuring program into the business in fiscal 2014, including products and solutions such as 3PAR, networking, Vertica and cloud solutions.
HP has been trying to ease the pain of a declining PC market by cutting costs and focusing on more profitable areas.
