HP Inc. shares edged up 3% in after-hours trading Tuesday then cooled after the computing giant reported a slight bump in fourth-quarter revenue as it continues to face stiff IT headwinds.
The Palo Alto, Calif.-based company HPQ, -0.45% reported net income of $388 million, or 26 cents a share, compared with net income of $1.45 billion, or 91 cents in the year-ago period. HP reported adjusted earnings of 60 cents, higher than the 58 cents expected from analysts polled by FactSet.
Revenue inched up 0.3% to $15.41 billion from $15.37 billion a year ago.
Analysts surveyed by FactSet had expected earnings of 51 cents on revenue of $15.27 billion.
“Our strategy is working and we are confident in our business heading into FY20,” new HP Chief Executive Enrique Lores said in a phone briefing before the results were announced. He noted “strong” free cash flow of $4 billion for fiscal 2019.
Still, the company continues to face IT spending headwinds. Its biggest business segment, Personal Systems, which includes sales of notebook PCs and desktops, improved 4% year-over-year to $10.43 billion. But its Printing segment declined 6% to $4.98 billion.
The uneven results come amid tumultuous times for the original Silicon Valley startup that had its beginnings in a Palo Alto, Calif., garage in 1939.
An HP spokesman declined comment on a bizarre takeover bid from Xerox Holdings Corp., whose market value is less than one-third of HP’s. On Sunday, HP’s board told Xerox CEO John Visentin in a letter that his company’s latest proposal “significantly undervalues HP.”
Xerox’s bid values HP at $33.5 billion, or $22 per share — $17 in cash and 0.137 in Xerox XRX, -1.19% shares for each HP share. HP’s market cap is about $30 billion.
HP first rejected an offer earlier this month. But on Thursday, Visentin threatened to approach HP’s shareholders directly if the two sides could not agree on a way to “support a friendly combination” by the end of the business day Monday.
The offer comes as HP embarks on a restructuring plan to eliminate 7,000 to 9,000 jobs from its roughly 55,000 workforce over the next three years. The cuts would amount to about $1 billion in annual savings, HP said at its annual securities-analyst meeting in October. HP is nearing the end of a three-year-old layoff plan that could eliminate up to 5,000 jobs.
See also: HP to slash 7,000 to 9,000 jobs over three years as part of major restructuring
“We are making good progress in our operating model,” Lores told MarketWatch in a phone interview before the results were announced. He said as part of the ambitious cost-reduction effort, some 1,000 employees have taken an early-retirement program.
HP shares are down 2% this year. The S&P 500 index SPX, +0.22% has gained 25.3% this year.
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