Hewlett-Packard’s first quarter earnings showed a drop in revenue and net income, coming in below Reuters analysts’ estimates.
The computer giant reported revenue of $26.8 billion, down 5% from last year. And net earnings of $1.4 billion, a drop of 4% from a year ago. The latest report also cut estimates for both the second quarter and the full year outlook.
CEO Meg Whitman said the company had “excellent execution” during Q1, and blames the larger-than-expected revenue drop on “currency headwinds” created by the dollar’s strong performance. Whitman says it cost HP $1.5 billion dollars in operating profit.
Personal computing products took a big hit, with sales of consumer hardware units falling by 6%. Competition from other computer makers along with aggressive pricing also led the decline.
HP announced late last year it would split into two companies before the end of 2015, with one direction focusing on business needs and the other on consumers. It took an $80 million dollar charge this quarter for the split, something Whitman thinks will been a profitability turning point for the company, "It's exhilarating because we see the two companies will be much more cost competitive than HPQ is today."
Whitman talked up a deal with Deutsche Bank, for the bank to outsource parts of its wholesale banking IT infrastructure to HP. The agreement is reportedly worth billions over a 10-year period.