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HP Posts Losing Quarter as Struggles Continue
Hewlett-Packard's struggle to turn things around continued in the second quarter as the computing giant reported double-digit year-over-year declines in revenue and net income. But CEO Meg Whitman on Wednesday promised that better times were around the corner.
HP reported second-quarter sales of $27.6 billion, down 10 percent from the second quarter of 2012, and profits of $1.1 billion, a 32 percent decline from the year-ago period. Earnings per share (EPS) of $0.55 was also down 31 percent, but in the second quarter, HP did return $1.1 billion in cash to shareholders in the form of dividends and share repurchases, the company said.
"After returning more than a billion dollars to shareholders through share repurchases and dividends in the quarter, we improved our operating company net debt position for the fifth successive quarter. By the end of fiscal 2013, we expect our operating company net debt to be below pre-Autonomy levels and approaching our goal of approximately zero," Whitman said in a statement, referring to HP's 2011 acquisition of enterprise software developer Autonomy and the $8.8 billion impairment charge the company was hit with over that deal.
Whitman shot from the hip during an earnings call Wednesday afternoon, telling investors and analysts that there were "no excuses" for HP's recent performance and execution.
"We need to a better job in transitioning from the technologies that worked in the past to the technologies which will work in the future. There are no excuses. We simply have to perform better," she said.
95 Percent of Q1 Android Smartphone Profits Went to Samsung
Global Android smartphone profits reached approximately $5.3 billion during the first quarter, but just one company took home the lion's share of that cash: Samsung.
According to stats from Strategy Analytics, Samsung's Android smartphone shipments resulted in $5.1 billion of worldwide profit during the quarter, or 95 percent.
"An efficient supply chain, sleek products and crisp marketing have been among the main drivers of Samsung's impressive profitability," Strategy Analytics' senior analyst Woody Oh said in a statement.
LG landed at No. 2 with 2.5 percent, while "others" made up the remaining 2.7 percent, Strategy Analytics said.
"LG delivered a small profit during the quarter, but it currently lacks the volume scale needed to match Samsung's outsized profits," Oh said.
Overall, the smartphone industry saw $12.5 billion in profits during the quarter, 43 percent of which went to Android.
According to stats released this week from Gartner, Samsung was the No. 1 mobile phone maker, capturing 23.6 percent of the market with more than 100 million units sold in the first quarter. In the smartphone realm, the company's share was higher, at 30.8 percent, with 64.7 million units sold.
"Samsung is, for now, the undisputed king of the global Android smartphone industry," Neil Mawston, executive director of Strategy Analytics, said in a statement. "We believe Samsung generates more revenue and profit from the Android platform than Google does."
Samsung could use its strong reputation and massive power to influence the future direction of the Android ecosystem, Mawston suggested, adding that Samsung could request first, or exclusive, updates of new software from Google before rival hardware vendors.
Apple Sells 37.4M iPhones, 19.5M iPads
Apple moved 37.4 million iPhones and 19.5 million iPads in the first quarter, which was down from its fourth-quarter numbers, but an improvement over the same time period last year.
Cupertino reported first-quarter profit of $9.5 billion, which was down from the $11.6 billion it reported in the same time period last year. Revenue landed at $43.6 billion, up from $39.2 billion last year. International sales made up 66 percent of the quarter's revenue, Apple said.
The 37.4 million iPhones sold was down from the 47.8 million it sold during the fourth quarter, but up from the 35.1 million iPhones sold during the same time period last year. Apple unveiled the iPhone 5 in Q4, however, so a drop-off is to be expected.
Customers snapped up 19.5 million iPads in the first quarter, meanwhile, down from the 22.9 million it sold in the fourth but up from the 11.8 million sold in the year-ago quarter.
Apple sold just under 4 million Macs in the quarter, down from 4.1 million in the fourth quarter and 4 million a year ago.
"We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad," Tim Cook, Apple's CEO, said in a statement. "Our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline."
Apple now has a cash pile of $145 billion, according to CFO Peter Oppenheimer.
Microsoft’s Strong Quarter Leaves Critics in the Dust
Microsoft may be having the last laugh with Thursday's report that the company enjoyed a strong uptick in sales and profits for the first three months of 2013.
The software giant pulled in revenue of $20.5 billion in its fiscal third quarter, up 18 percent from the same period in 2012, while also reporting operating income of $7.6 billion, up 19 percent, and diluted EPS of $0.72, up 20 percent.
"The bold bets we made on cloud services are paying off as people increasingly choose Microsoft services including Office 365, Windows Azure, Xbox Live, and Skype. While there is still work to do, we are optimistic that the bets we've made on Windows devices position us well for the long-term," Microsoft CEO Steve Ballmer said in a statement.
Microsoft's financial results are always closely watched, but never more so than in the wake of reports from IDC and other research firms that PC sales around the world have declined precipitously in recent months.
PC makers shipped 76.3 million units in the first three months of the year, a 13.9 percent decline from the same period in 2012, according to an IDC report issued about a week ago. That's the steepest year-over-year decline since the research firm began tracking the PC market's quarterly performance in 1994, IDC said.
Intel’s Rough Quarter Reflects Moribund State of PC Industry
Intel on Tuesday divulged declining numbers across the board in a first-quarter earnings report which pointed to continued struggles for the PC industry.
The chip giant, the world's leading supplier of processors and chipsets for Windows-based laptops and desktops, reported $12.6 billion in sales for its first quarter, down 7 percent sequentially and down 2 percent year-over-year. Net income of $2 billion represented a decline of 17 percent from Intel's profits in last year's final quarter and a 26 percent drop from the first quarter of 2012.
Intel's declining financials reflected ongoing problems for PC makers and suppliers faced in recent years with stiffer competition from makers of mobile devices like smartphones and tablets. Microsoft's release of Windows 8 last October has apparently done little to reinvigorate a moribund PC market; nor has Intel's own Ultrabook initiative to push ultra-thin, fast-booting laptops with long battery life to better compete with mobile devices.
Still, Intel president and CEO Paul Otellini put a brave face on the numbers.
"Amidst market softness, Intel performed well in the first quarter and I'm excited about what lies ahead for the company. We shipped our next generation PC microprocessors, introduced a new family of products for micro-servers, and will ship our new tablet and smartphone microprocessors early this quarter," Otellini, who will step down as the company's chief executive next month, said in a statement.
Amazon Profits Take a Hit as Transition to E-Books Continues
Amazon boosted its sales in the holiday quarter but net income was down as the online retail giant said it continues to feel the effects of transitioning from physical book sales to digital media for consumption on its own Kindle devices and other platforms.
The company is selling a lot of Kindle tablets and ereaders—for the second year running, the Kindle Fire HD was "the No. 1 best-selling, most gifted, and most wished-for product" in Amazon's enormous product catalog—but sluggish fourth-quarter sales growth in the product that launched the company, books with actual pages, was the lowest in Amazon's history.
"We're now seeing the transition we've been expecting. After five years, e-books is a multi-billion dollar category for us and growing fast—up approximately 70 percent last year," Amazon CEO Jeff Bezos said in a statement. "In contrast, our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5 percent. We're excited and very grateful to our customers for their response to Kindle and our ever expanding ecosystem and selection."
Amazon's net sales of $21.3 billion for the fourth quarter of 2012 represented a 22 percent increase from the same period in 2011. Operating income was also up 56 percent year-over-year but holiday quarter net income of just $97 billion was down 45 percent.
For the full year, Amazon's net sales came in at a healthy $61.1 billion, up 27 percent from its fiscal 2011, but 2012 operating income of $676 million was down 22 percent and the company wound up posting a loss of $39 million on the year after reporting profits of $631 million in 2011.
AT&T is More Profitable But Falls Short on Expectations, Customer Additions
AT&T, Inc., unlike its rival Verizon Wireless, saw profits climb for Q4 2012. However, that still wasn't enough to reach analyst expectations.
Analysts predicted a profit of $0.4545 USD/share on revenue of $32.2B USD. AT&T delivered a profit of $0.44 USD/share (after one-time charges) on revenue of $32.6B USD. AT&T did reward shareholders with $4.4B USD in stock buybacks for the year, taking its total for the year to $12.8B USD.
AT&T sold 10.2 million smartphones for the quarter, which it claims is a record for any American phone carrier. IPhone upgrades accounted for the majority of those sales; in total AT&T sold 8.6 million iPhones, ahead of Verizon's 6.2 million iPhones sold. AT&T added 780,000 total new post-paid subscribers, less than the 2.1 million Verizon tacked on.
If Verizon is winning the war of customer additions, AT&T is winning on the profitability front. However, both of America's top two carriers fell slightly short of analyst hopes amid various issues, including damage from Hurricane Sandy.
Ma Bell continues to grow its U-Verse cable service, which is slowly creeping across the country.
Microsoft Posts Record Sales, But Earnings Dip
Microsoft on Thursday credited strong enterprise-driven demand and the introduction of Windows 8 and other new products for record sales numbers in the software giant's fiscal second quarter.
"Our big, bold ambition to re-imagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers," Microsoft CEO Steve Ballmer said in a statement.
"With new Windows devices, including Surface Pro, and the new Office on the horizon, we'll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need," added Ballmer, who did not participate in an earnings call with analysts and investors on Thursday.
Microsoft reported second-quarter revenue of $21.5 billion, up nearly 3 percent from the $20.9 billion in sales generated in the same period a year ago. But operating income of $7.77 billion declined 3 percent year-over-year and Redmond's profits ($6.38 billion, down 4 percent) and EPS ($0.76 per share, down $0.02) also slipped.
Among its business units, the big year-over-year gainers were Microsoft's Windows Division ($5.88 billion in revenue, up 24 percent from Q2 2012) and its Server & Tools business ($5.19 billion, up 9 percent).
AMD Loses $1.18B in 2012, Promises Changes
Advanced Micro Devices took a step back financially in 2012 but executives said Tuesday that the company's investments in areas like low-power chips for tablets and the data center would straighten the ship in the coming years.
AMD's fourth-quarter and full-year numbers were down across the board, with fourth-quarter sales of $1.16 billion down 31 percent from the fourth quarter of 2011, and overall revenue of $5.42 billion for 2012 down nearly 18 percent from the previous year.
The net income picture was equally distressing for a company which fought its way back to profitability a few years ago following a long string of quarters in the red, only to find itself on the wrong side of the profit-loss column once again. AMD lost $473 million in its fourth quarter and lost $1.18 billion for the year after reporting positive net income of $491 million in 2011.
The chip maker's larger rival Intel reported similarly flagging numbers in its own year-end earnings report last week, but AMD's year-over-year declines were steeper in most categories, its margins thinner, and the hit to investors—a loss of $1.60 per share in 2012—more dear.
"AMD continues to evolve our operating model and diversify our product portfolio with the changing PC environment," AMD president and CEO Rory Read said in a statement. "Innovation is the core of our long-term growth. The investments we are making in technology today are focused on leveraging our distinctive IP to drive growth in ultra low-power client devices, semi-custom SoCs and dense servers.
Facebook Posts Third-Quarter Loss but Strong Mobile Growth
Facebook on Tuesday reported encouraging 32 percent year-over-year revenue growth but suffered a $59 million loss in its fiscal third quarter, while highlighting progress in its mobile business and outlining a plan to monetize its social graph in the coming years.
"As proud as I am that a billion people use Facebook each month, I'm also really happy that over 600 million people now share and connect on Facebook every month using mobile devices. People who use our mobile products are more engaged, and we believe we can increase engagement even further as we continue to introduce new products and improve our platform," Facebook CEO Mark Zuckerberg said in a statement.
Facebook reported sales of $ 1.26 billion in revenue for its third quarter, up from the $954 million it pulled in during the same period last year prior to going public. Ad sales of $1.09 billion represented 86 percent of its total revenue for the quarter. The company's loss, a contrast to net income of $227 million in the third quarter of 2011, was attributed to "share-based compensation and related payroll tax expenses and income tax adjustments."
Zuckerberg said Facebook's early years were spent mapping the social relationships between users but that the company would use the resulting social graph to grow "apps and experiences" based around that data in the next five to ten years. He described social data as a "new form of critical infrastructure" for enterprises, which he said were developing crucial business tools and processes around social networking.
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