HP jumps as Whitman signals more cash for shareholders

SAN FRANCISCO -- Hewlett-Packard shares jumped more than 8% Wednesday after CEO Meg Whitman signaled more cash for shareholders and expressed confidence in her turnaround of the struggling PC and printer maker.

HP expects to have more financial flexibility to return cash to shareholders, while still investing future growth opportunities, Whitman said during the company's annual analyst day.

Whitman also said that HP is making "real progress" on a turnaround plan.

HP expects the year-over-year revenue decline in fiscal 2014 will moderate from fiscal 2013, CFO Cathie Lesjak added.

Whitman, the former eBay CEO, took the reins at HP in 2011 just as a downturn in PC demand was taking hold. That has dented HP's growth prospects, but the company still generates mountains of cash.

After planned capital expenditures, HP expects free cash flow of $6 billion to $6.5 billion in its 2014 fiscal year. The company plans to return at least half of that cash - more than $3 billion - to shareholders through dividends and share repurchases, the CFO said.

HP shares climbed 8.9% to close at $22.60 Wednesday. The stock is up more than 50% so far this year.

However, HP has lost about half its market value in the past five years as tablets and other mobile devices have eaten into sales of PCs and laptops, where HP dominates.

This year's analyst day "was a welcome change from last year when HP significantly lowered guidance, highlighted major issues in its Services business and made clear that a turnaround would take many years," Brian Marshall, an analyst at ISI Group, wrote in a note to investors.

Still, Marshall kept his neutral rating on the stock, arguing that "secular and competitive challenges will be too great for HP to overcome."

Indeed, Gartner reported Wednesday that PC shipments slumped almost 9% in the third quarter.