Hewlett-Packard Tops Earnings Expectations
On Thursday, after the closing bell, Hewlett-Packard Co. (HPQ, +2.30%) reported that the company was negatively impacted by declines in all its major segments. The company also reported a decline of 7 percent in revenue in the fiscal second quarter ended April 30, reporting revenue of $25.5 billion which missed analyst expectations for revenue of $25.635 billion. According to H-P, the stronger U.S. dollar (USD) impacted the results and on a constant-currency basis, this decline was 2 percent. Added to this, H-P’s earnings fell from 66 cents a share and $1.3 billion for the same period a year earlier to 55 cents a share or $1 billion. Excluding specific items, H-P’s earnings per share were 87 cents, down from the 88 cents EPS reported a year ago. Despite this decline, the reported EPS beat analyst estimations of 85 cents. In October last year, Hewlett-Packard unveiled its plans to separate its corporate hardware and services operations from its personal-computer and printer businesses. On Thursday, the company provided additional information on this process and they also named Cathie Lesjak, the CFO, as the financial chief of HP Inc. Meanwhile, the CFO of Hewlett Packard Enterprise will be Tim Stonesifer who is currently the CFO of H-P’s enterprise group. For the current quarter, H-P expects earnings, excluding items, of 83 cents to 87 cents a share which is below the projected 87 cents from Thomson Reuters analysts. In after-hours trading, the shares of Hewlett-Packard increased 1.9% to trade at $34.46 a share.
On Thursday, U.S. stocks ended slightly higher and the S&P 500 index (SPX) moved to a new record high. After the minutes of the meeting of the Federal Reserve on Wednesday, it seemed evident that the central bank is not likely to increase interest rates in June. At the close of trading the SPX advanced 0.2%, or 4.97 points, to settle at 2,130.82. This marked an all-time high for the benchmark index. Meanwhile, the Dow Jones Industrial Average (DJIA) ended the trading session virtually flat at 18,285.74 while the Nasdaq Composite index (COMP) rose 0.4%, or 19.05 points, to 5,090.79. Also, on Thursday, economic data showed that the number of people who applied for first time unemployment benefits in the U.S. in mid-May increased to 274,000, up 10,000. This marked the highest level so far in the month of May yet was still close to the 15-year low.
In currency trading on Thursday, the U.S. dollar (USD) traded lower. This came in response to poor economic data which prompted concerns regarding the strength of the economy in the country. In their report, the Department of Labor stated that the number of people applying for initial jobless benefits for the week ending on the 16th of May was at 274,000, up 10,000. The previous week’s total was at 264,000 and the latest results missed analysts’ expectations for an increase of 7,000 to 271,000. Separately, the National Association of Realtors reported that in April, existing home sales declined 3.3% to 5.04 million units. This was down from March’s revised total of 5.21 million units. The EUR/USD traded at 1.1126, up 0.29% while the GBP/USD also advanced 0.76% to trade at 1.5656. Against the Australian dollar, the Japanese yen and the Swiss franc, the USD traded mixed with AUD/USD steady at 0.7879, the USD/JPY trading at 121.14, down 0.16% while the USD/CHF was down 0.17% and trading at 0.9356. Also, the U.S. dollar index was at 95.44, down 0.21%.
On Friday, in early morning Asian trade, crude oil prices declined. This comes as investors now turn their attention to the weekly report out of the U.S. on drilling activity. WTI crude oil for delivery in July traded at $60.66 a barrel, down 0.11%, on the NYMEX. On Friday, Baker Hughes (NYSE:BHI) will report the rig count for oil services in the U.S. This will provide investors with a clearer indication of the supply level in the country. In their last week’s report, Baker Hughes reported that only 660 oil rigs are drilling for oil in the U.S. which also marked the 23rd consecutive weekly decline in oil rig numbers. Meanwhile, on Thursday, Brent crude oil for delivery in July traded at $66.57 a barrel, down 2.37%, or $1.54, on the Intercontinental Exchange (ICE).