Hewlett-Packard Earnings Preview (Q2 2007)

Hewlett-Packard (HPQ-NYSE) reports earnings after the close today.  Forget about today’s earnings because they already fessed up that they sent out an email noting that they would beat expectations.  This quarter report is going to be all about guidance and ancillary operations outside of just PC’s, laptops, and printers.

For formalities, today’s estimates are $0.69 EPS and $25.4 Billion.  More importantly, we have to look ahead: next quarter estimates are $0.64 and $24 Billion, Fiscal Oct-2007 is $2.73 and $100.65 Billion.  They may only give some rough percentages for Fiscal Oct-2008, but if they do give guidance that far out then the street is at roughly $3.05 EPS and $105.2 Billion revenues.  In percentage terms that represents roughly 11-12% EPS growth and almost 5% revenue growth.  These forward numbers are ex-acquisitions and ex-restructurings.

The company might not be able to take away as much market share from Dell as it did in the last two quarters, but it still could see some gains and its #1 PC-seller rank is not really at risk right now.  It makes more on servers now as well as more on the people side of the business with software and consulting. 

Shares of Hewlett-Packard are only up about 3% since its mid-February report, but shares are up 14% from the lows since that time.  With the gains seen today, shares of Dell (DELL) are up about 4% over the last 3 months, and Dell is up about 13% from its lows during the same period.  Jim Cramer just last night named CEO Mark Hurd as one of the top five transformational CEO’s out there.

Jon C. Ogg
May 16, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.