Source: HP, edited by the author.
What: Shares of HP (HPQ -0.36%) fell as much as 16.3% on Wednesday before recovering to a 14% drop at 12:27 p.m. Eastern time. Both HP and sister company Hewlett-Packard Enterprise (HPE -0.64%) reported fourth-quarter results on Tuesday night, with sharply divided market responses. The Enterprise stock surged as much as 8.5% higher on Wednesday morning before backing down to a 2.1% gain
So what: Because a single press release contained results for both the consumer-oriented HP and the business-focused Hewlett-Packard Enterprise, then compared them to results from the combined company in the year-ago period, these results can be confusing even to battle-harden veteran investors.
That being said, the two companies combined for $25.7 billion of fourth-quarter revenues, down 9% year over year. Adjusted earnings stopped at $0.93 per diluted share, a 12% year-over-year decline.
These results fell short of the combined analyst projections for HP and Enterprise, which added up to sales in the region of $26.4 billion and earnings near $0.98 per share. Meanwhile, Hewlett-Packard Enterprise's total segment revenues came in 5% above analyst estimates.
Now what: If your head is spinning from these conflicting and vague numbers, you're not alone. Splitting the old Hewlett-Packard in half has not done anything to clarify how each business operates. So far, the effect is more like the exact opposite.
The only segment reporting year-over-year sales growth in this quarter was the core enterprise group, up 2% in constant currency. Everything else headed south, led by 14% lower sales of both printing products and personal systems.
Then again, it's not entirely clear that you should trust the Enterprise sales numbers as stated. That $14.1 billion figure was arrived at by adding the company's various business-class segment sales. The "Total HP" result backs out $1.1 billion of inter-segment net revenues, and I'm not at all sure how that works out for Enterprise investors.
In other words, HP and Hewlett-Packard Enterprise may have changed on the surface, but the two halves are still very deeply intertwined -- exactly as predicted. If Enterprise coughs, HP gets a cold.
HP had been surging in the last few market days before this report while Enterprise lagged behind. Wednesday's market action brought them closer together, both having fallen a little since the beginning of November.
