HP shares up amid signs of confidence in restructuring programme

Shares in Hewlett-Packard rose six per cent on Wall Street yesterday following better than expected results for the three months to the end of January.

While sales dropped by six per cent and profits declined by 16 per cent from the previous year, most analysts - and even HP's management - had predicted worse. Against an average estimate of $0.71 per share HP managed $0.82 ($0.73 once accounting procedures had been taken into account).

Given that year-on-year revenues have now dropped for the sixth consecutive quarter, it may be hard to see where investor optimism is coming from. However, HP remains the world's second largest manufacturer of personal computers, and CEO Meg Whitman has been taking drastic measures to reverse the company's decline.

Back in May Whitman warned that there would be 27,000 job cuts by 2013, and later said that the axe would fall on poorly performing business units.

HP has also been taking measures to decrease its debts. The latest figures show that these have been reduced by $1bn over the last quarter, continuing the trend seen throughout 2012.

However, the company is still struggling to put behind it a string of disastrous acquisitions, the most recent being that of Autonomy, which is the subject of fraud investigations. And like other PC makers, HP has found it hard to adapt to a world that is increasingly dominated by tablets and smartphones.

Despite these difficulties Whitman said the effects of the restructuring would accelerate over the coming year.

"Our primary focus is to deliver on the full year outlook, and I feel good about the rest of the year," she said in a statement.

"We'll be bringing a number of new programmes and disruptive innovations to market in the coming quarters, and we expect the benefits from our restructuring will accelerate through fiscal 2013."

The restructuring is due to end in 2014. Whitman said last year that she believes operating profits will grow faster than revenues by 2016. The better than expected results suggest that some at least believe that HP might just be on course to do that.