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Hewlett-Packard Revenue and Cash Flow Improve, but Earnings Fall

Hewlett-Packard’s third-quarter revenue edged out what analysts on Wall Street had expected the company would generate.Credit...Justin Sullivan/Getty Images

SAN FRANCISCO — In nearly three years running Hewlett-Packard, Meg Whitman has restructured and managed costs at the technology giant, buying time for what had been a company in crisis. What’s not yet clear is whether she has built it a future.

The problem was reflected in H.P.'s third-quarter earnings, released Wednesday. Revenue was modestly higher, while earnings fell. Ms. Whitman also managed to drastically increase H.P.'s cash flow, critical for new investment, while increasing research and development by 11 percent.

“We feel good about the future,” she said in an interview. “We’ve gone back to what made this company great.”

Still, there were no signs that the areas Ms. Whitman identified as the pillars of future growth — big data analysis, cloud computing, and security software — would yield significant revenue, even in a year or two.

That may be understandable, given that H.P. is on track to have revenue over $100 billion this year. “For us, $100 million is nothing,” she said. “For a start-up that would be huge.”

Ms. Whitman also said that H.P. would soon make announcements about going into three-dimensional printing. Here also, she said, revenue would be some time off.

Wednesday’s results were slightly better than Wall Street had predicted. H.P. had revenue of $27.6 billion, up from $27.2 billion a year ago. Net earnings were $985 million, or 52 cents a share, down from $1.4 billion a year earlier.

The revenue number was well above the $27 billion predicted by analysts polled by Thomson Reuters. Using nonstandard accounting popular with technology shares, analysts had projected earnings per share of 89 cents, which was the figure H.P. reported using this method. H.P. shares nudged down slightly in after-hours trading.

Much of H.P.'s higher revenue may have been a result of a decision by Microsoft to discontinue earlier this year support for an older version of its Windows operating system, causing many businesses to buy new PCs.

“Meg’s done a fantastic job restructuring and getting the company in shape, but in the end you have to grow, too,” said Bill Kreher, technology analyst for Edward Jones. “H.P. has to demonstrate they are committed to the future, even as they get credit for cost cutting.”

When Ms. Whitman came on board as chief executive in September 2011, not only was the tech world shifting from H.P.'s core businesses, but H.P. had also been through a close succession of chief executives, along with years of boardroom turmoil.

“The root cause was more than C.E.O.s and boards,” Ms. Whitman said. “There were changing strategies, a lack of focus on innovation and a cost structure we could no longer afford.”

It took a year to figure all that out, she said, and another year to fix it. This year’s growth, she said, would feed returns that may not be seen for a few more years.

A version of this article appears in print on  , Section B, Page 2 of the New York edition with the headline: Hewlett-Packard Revenue Is Up but Earnings Drop. Order Reprints | Today’s Paper | Subscribe

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